SF GOLD SHOW REPORT:
This morning I went to the "Western Investment in Mining Conference" as it is officially called. I registered under the nom de plume "Tom Otto." When I filled the registration form out the woman asked me, "Didn't you just register?" I said I hadn't. She said, "Sure! Tom and Gloroia Tomato...oh well, guess there must be two Tom Ottos this year." Guess I should have used Tom Mato instead. Oh well, there's always next year.
The pickin's were pretty slim this year. Seemed like low attendance and fewer booths than ever. Guess the POG will do that. I arrived a tad early for the 10:30 Diamond Mining section of the program and had to sit through Adrian Day's bullshit as well as BS from the affirmative action bimbette, Mary Anne Aden. Nothing they said was worth repeating, IMHO.
John Lydall of First Marathon kicked off the diamond discussion by opining that the diamond industry faced major challenges. The Asian collapse has reduced demand. The supply side is increasing due to Diamet. The price of diamonds is a critical factor to the success of stocks in the sector. Juniors need good diamond prices to attract capital. There are fewer and fewer qulity projects.
Art Ettlinger of Yorkton was the next speaker. He emphasized that Canada is in the diamond business, since he says people tend not to belive this fact in most places on earth. Lots of ignorance out there. He went thru the Ekati and Diavik numbers, e.g. 6% of global production by value for Ekati,6-8 mil. carats year from Divik...Canada wil be the world's 6th largest producer soon.
Worldwide, 3% of kimberlites that are on craton are economic, but the NWT numbers are better than that average.
He mentioned MVP and Lytton. He spent the most time on WSP. He replied to the criticism about the 3 large WSP stones and the high percentage of value in those big stones by saying that high end diamonds is exactly what you want. Next hurdle is the 5000 tonne bulk sample.
He mentioned MGJ and Victoria Island. In Alberta, the exploration is based on geophysics whereas in NWT it's based on indicator minerals. Alberta shouldn't be written off yet, since there will be as many as 50 pipes discovered by next summer and I think 1% of off-craton pipes tend to be economic, so there's still a possiblity there.
SUF: Unfortunately, Chris Jennings wasn't there as advertised. The IR guy gave a presentation, and reminded me of all that SUF has on the burner, which is considerable. They have 60 ex-DeBeers people in their mgt. now, which one of their booth people said doesn't make DeBeers very happy. SUF is the 2nd largest diamond producer in Africa. The may add Platinum to their exploration list. In the NWT they have Yamba Lake- 6 pipes on the pty. C$1.5 mil budget this winter. A project with Kennecot has a C$1mil budget- they'll restest kimberlites already discovered. Back Lake has a C$1 mil budget.
In Anglola they have 3 areas of concentration, of which Camafuca sounds the best to me. Could be a BIG pipe. And of course Klipspringer - quarter million carats per year for 15 years were, I believe, the figures. I think he said SUF should have a half million carats net to them next year. 46 cents/yr. in earnings and betweeen $1.90 and $2.01 cash flow/yr. They might pay a dividend next year.
MPV: I may have been prejudiced against Vandersande after hearing some personal stories from some thread friends, but in any event I didn't much care for the dude. I assume he must be from Holland with his accent. He was a bit of a bore/boer. He must have said that DeBeers was the "right partner" about 5 times. Kept talking up DeBeers, which seemed odd in juxtapositon with the SUF presentation, SUF having taken it in the shorts from DeBeers, IMO. He went thru the known stuff on MPV, including the four pipes and 4-8 more pipes on the pty. Bulk sample extraction by end of May. I noted that he stated that the market cap for the project is $150 mil. Not sure how me calculated that.. I like to compare WSP to MPV and this is how I calculate the difference (sorry to digress):
MPV 47 mil shares fully diluted, which is about the same as WSP after the last PP,assuming that all options are exercised.
MPV has about 40 mil tonnes at an ave. value of somewhere around $100/tonne (didn't calculate the 4 pipes and do the precise arithmetic- just a rough guess. So, that's a $4 bil. resource, and MPV has 36% interest carried to production.
WSP- 3.5 mil tonne min at $343/tonne. Could be in excess of 20 mil tonnes. Let's use around 12 mil tonnes- which would be about the same in situ value as MPV. So WSP is about C$2.35 and MPV is around the same. WSP has a good shot of having a lot more than 12 mil tonnes at Snap. MPV has a shot at more pipes on it's pty, but it sounds like the 4 pipes they have will be the focus of any feasability study. BTW, Vandersande said that there's a lot of pty they have there to explore. WSP, on the other hand, has the possibility of THE SOURCE as well as Carat and Hilltop- so Ifavor WSP myself, especially since I view the DeBeers connction as a negative and not a big positive. WSP controls its fate- DeBeers controls MPV's.
BOOTHS: Tom Yingling was there for Montello. He was busy and I didn't have a chance to shmooze with him. I talked with the SUF IR who turned me over to this other guy who was supposedly a geologist and could better answer my questions. After asking him a question about dykes and type 2 kimberlites, he admitted he didn't know much about the topic and asked if I were a geologist. SOL
I saw Tanaka of MGJ and Fjordland walking around, but didn't feel like bugging him with questions. Lytton had a booth.
As I walked around, I saw the famous BB. I got a couple feet away to check out whether or not he had a toupe, as Fix suggested. I'm not expert, but if he doesn't have one, he must have very unusually thick hair for a man his age. Unfortunately, I didn't see "Irish Jack" Peter Grandich around. Jim Dines was at his booth with a couple foxes - give the guy credit for using sex appeal to sell.
The show was noteworthy for its lack of goodies. No free chocolate kisses or gold coins or bars. No mining for gold nugget booth. Few free pens and no free post-its. I did get a button that said, 'No Dry Holes." I thought it was a KY Jelly promotion, but it was for Oil-Tech.
That's my Gold Show report for l998. Hope it was helpful. |
