WillP Speaks on Winspear Message Board

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Gold/Mining/Energy : WillP Speaks on Winspear

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To: teevee who wrote (16)	2/19/1999 2:58:00 PM
From: Chas.	Read Replies (2) of 177

------------------------------------------------------------------------ Author: WillP -- Date:1999-02-19 06:54:38 Subject: Value Here is the uncertain one. I'll try to analyze this one without benefit of statistics, or to go through in detail what I've done before. The mini bulk sample returned a value of $301 US per carat. #1. Large gems were found at both sampling pits. #2. Earlier analysis of colour suggested that 44% of stones were 'white' and 88% were 'transparent'. This could imply that one could expect that almost 40% would be of a quality sufficient to be considered gems. (As opposed to the phrase 'gem quality'.) Some of these stones could exhibit inclusions or flaws sufficient to degrade their value considerably. I had earlier calculated that the entire mini-bulk would have to have contained 25% of the stones with comparable quality to the three largest if one were to ignore same, and 33% if one includes their carat weights only. #3. There is a reasonable and natural reason to expect larger boor quality diamonds to fracture much easier than good quality stones. Flaws, cracks, and inclusions in poor quality stones are among them. #4. There is a reasonable and natural reason to expect larger samples to return a significantly lower value per carat. Primarily...if the results are unusual...they will not be duplicated. #5. Evaluating 'value' on a small parcel is statistically not relevant. This would be the 'skew' factor. One could, however, make a case for a 'minimum' value by discounting some or all of the large gems. The value obtained by rejecting them all is just under $90 per carat. #6. It would be 'more correct' to not reject them all...but just the largest, or the largest two. In this case, if we reject the most valuable found in each pit...we are left with a probable value per carat around $140 or so. #7. In deciding whether to reject or include these stones...one would have to know if (a) the sheer size was abnormal. (Apparently not) (b) the quality was abnormally high. (Unknown) So...there is much to consider. At this stage what an individual believes or disbelieves is purely a matter of faith. Here...you'll have to assign your own value per carat...and assess what the chances of it being realized in the bulk sample. I think the key question...given tonnage and grade expectations...what is the minimum value per carat that is required to make this a worthwhile mine? What are the chances in your mind of the bulk sample indicating that figure? Cheers, willp

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