Tomato,
Author: teevee --
Date:1999-02-13
12:36:52
Subject: mine is bigger
than yours
WillP, as usual, a great
post. thanks for setting me
straight on "Indian Goods"
land "gem quality". Correct
me if I'm wrong, but, of the
remaining 11,520 carats
(represented by 123,000
stones) which average
$21.00 per carat, if we
count only 23,437 of them
to be of sufficient quality to
be of use as jewellry, they
average at under $11.00
per stone. If the average
size is, as you say, .1
carats, they are certainly
Indian Goods based on
size, and given their
average value per stone is
less than $50.00, they
aren't gems either.
On an aside, from a world
wide retail perspective,the
biggest seller is an 8 point
brilliant cut diamond. Given
that it takes about a .16
carat rough to cut an 8
point diamond, your
calculated average stone
size of .16 carats for
Winspears diamonds
versus the average size of
.1 carats for A154-south,
is of great importance.
Bottom line, just as
diamond size is a
log-normal distribution, the
price of individual
diamonds (of similar
quality) is log-normal to
their size.......Winspear
appears to have a larger
average diamond size (and
ideal for current market
conditions) and more larger
stones.......Given my
assessment of the
exploration risks at Snap
Lake at this point in time, I
would still rather own
Winspear than Aber.
regards, teevee
Top
Reply
Author: WillP --
Date:1999-02-13
16:24:05
Subject: Size Doesn't
Matter...
It's what you do with it that
counts. :-)
Yes...you have my point
exactly. It is *numerically*
correct to state:
#1. The world's largest
producer of industrial
grade stones is Argyle.
#2. The world's largest
producer of Indian goods
*will* be Diavik.
It is also correct to state,
based on dollar value:
#1. Diavik will be one of
the largest (if not the
largest) producers of the
finest gems.
#2. Argyle remains
profitable solely through
the marketing of pink
fancies...which of course is
in a league beyond anything
found in Canada...to date.
So: I think now that you
follow my thinking...you
will agree with me.
You have also stated your
final position, if you will
allow me to paraphrase:
"I, teevee, accept without
(much) question the
mini-bulk samples of
Winspear as being
representative or an
understatement of the
resource as a whole.
Accordingly, I expect them
to outperform Diavik in
dollar value of fine gems."
If that's your position...I'll
concur wholeheartedly with
your conclusion.
From where I sit...there's
still the question of what
the 6000 tonne sample will
return. Aber's $302 is not
far below $343...and just a
wee bit of slippage could
drop WSP into 'second
place'.
I think they're both a buy.
More risk with
Winspear...but with risk
comes more upside.
One other thing to keep in
the back of your mind. In
spite of having used the
same plant to process the
bulk...Winspear had a
weird mesh size...and the
recovery of small shrapnel
suffered as a result. If they
go to a 'standard' 1x3 mm
mesh...look for an increase
in grade of 0.15 to 0.30.
This will come, as you can
surmise, with little increase
in value.
The impact of that is
ominous. Bulk sample is
released with a grade of
2.02 ct/ tonne!!!! Wow!
Can hardly wait for the
valuation.
Unfortunately, a week later
the per carat value
arrives...at $175 per carat.
The casual investor is
crushed.
But I see...the 1.47 grade
of pit 2 is sustained, and
the additional increase in
grade is just the additional
recovery of small stones.
The 'ficticious' increase in
grade has lowered the per
carat value drastically, but
the value per tonne is
actually higher than from
the mini-bulk.
Could well happen.
Nice posting with 'ya!
WillP
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