Author: WillP -- Date:1999-02-17 12:12:42
Subject: Welcome Back
Yes...you can barge to McLeod Bay. I've actualy done it, about 20
years ago via NTCL out of Hay River. It's one approach. The
MPV site is closer however. I do wonder about the cost
comparison...I don't think it's cheaper...or quicker. Of all the
concerns about Snap...getting the supplies there is minor.
We're getting ahead of ourselves here, however. :-)
You say "Large gem diamonds are the key to success.." Well, Duh!
:-)
All of the main prospects in the NWT have that...in spades. Diavik,
Ekati, almost certainly some of the MPV pipes, and probably
Winspear.
No...it's not a straight line of increase. However...doubling the
tonnage per day involves capital costs in developing the
site...tripling does it again. Then suddenly you have triple the
through-put. You need to increase the size of your processing
facility.
You'll find that an additional expense of $50 million minimum is
required to advance this project to feasibility. Add an additional
$125 million for the MRDI model. Add another $50 million for a
second open pit and underground operation. Add another 50 for a
third. Where do you store the country rock and processed ore?
Suddenly..you're approaching and exceeding $300 million.
Diavik is costly (just under a billion) because of the dykes
required...not to mention a 5000 tpd operation. Ekati was costly
(about 700 million?) due to the lakes that were drained, etc.
As long as the Snap Lake plans stay the heck away from the
lake...costs *will* be significantly lower. But not the 1/10 value I
keepp hearing.
Let's not consider Jimmy Pattison the saviour of the Canadian
diamond industry just yet. I seriously doubt he would dare sit
himself down as the CEO of any diamond mining concern.
If Winspear had to raise $200 million via equity financing at, say
$5...that results in a 50% dilution to existing shareholders, in round
numbers.
If DeBeers offered $5 per share for WSP...what would the
shareholders say? At what price do they succeed?
I'll have to re-read my poison pill proxy circular...there's something
about "friendly" vs. "hostile" in it, isn't there DiamondWillie?
I'm betting that far more likely a scenario is some deal between
Aber, Winspear, possibly DDML (RTZ) and DeBeers...concerning
marketing of diamonds from Diavik and Snap, and possible
participation in the latter in exchange for footing some costs.
But who knows? :-)
That's what makes it fun.
Take care...
WillP |
