Hello Marty
The down side on MIY is its share float vs its % of the play. I say this only in comparison to the other junior partners at Yamba Lake. The upside is its liquidity hence large positions can be adopted with lessor risk.
If Yamba were the Back lake property, I would say that the price would do well to get over $1.00/s. I say that because while that property may well produce one to three pipes of exceptional value, there may only be three of them, and possibly less. The odds against sufficient economic ore are not as attractive as at Yamba Lake.
SUF have 30 airborne targets with only 66% of the property surveyed. For the sake of argument, let's say the same ratio holds up over the remainder of the property. That would give a theoretical total number of targets of 45 upon completion of the airborne survey. OK, so lets say after the ground geophysical survey is done, 40% of those airborne targets turn out to be probable kimberlite pipe targets. That is 18 probable pipes. Now the market starts to speculate a little, but not too much. Why? Because one, targets are not the same as pipes, and there has not been an economic pipe found here yet, only north of us and south of us. So we only see some early modest movement.
Now let's say we get fortunate on the first and second target drilled. Both drills strike kimberlite and a week later, both kimberlites are confirmed as pipes. So now the market says, "Ok, SUF has 18 targets and they can tell the difference between mudstone and kimberlite, so eighteen targets must be 18 pipes". Then we see a little more movement cus one of the ifs is checked off.
So what next. Well the market wants to know if they're worth anything, right? So lets say we get lucky on the first or second one drilled and the micro/macro counts come back attractively. Now the market says "Jeez"! "They drilled two pipes and one looks economic already... and they have 16 more to drill... they could have 3 maybe more economic pipes! This could be a mine!
OK, so at this point you are starting to check out beech front in the Bahamas cus your $0.15 shares just hit $3.50 and the shorters are getting killed on the buying pressure.
Now here is the fun part of the fantasy. I can't remember which one, it might be, possibly the Ptarmigan or T-10 pipe, but one of the six pipes found so far on the Yamba Lake property is considerably larger than those typically found in the NWT, 5 or 8 hectares I think. So now one or more of those ground targets, which have already been reported to be quite large, is drilled and tested and the results come back with high macro counts and probable exceptional economics.
OK, so now the market says its 1992 all over again! We got 3 of more economic pipes, 1 or 2 of which are say 5 and 8 hectares in size, and the rest have not even been drilled yet.
To top it off, SUF re-drill the Ptarmigan and T-10 and after taking and testing a large representative sample, they report that the grade is economic and that a few larger stones of exceptional quality were recovered!
So what would the share price look like?
Lets be conservative to start, say $0.35 upon the news that the ongoing ground mag program indicates that some of the airborne targets appear to be kimberlite pipes.
Lets stay conservative, say $0.65 upon the news that the first two ground mag targets were drilled and are in fact kimberlites.
Lets still stay conservative, say $.90 upon the news that the second pipe tested appears to have a high macro count.
The party is starting when the fifth ground target proves to be a 5 hectare pipe. Now we see some speculative interest, say $1.25.
The market yells, "PARTY AT YAMBA LAKE" when it is tested and it comes back with high macro counts. We are in the $3.25 range and there are still 11 more pipes to be drill test reported.
Why all the excitement though for a junior with only 19% of the play and 48.7 million shares.
Because we have multiple pipes.
Its one thing to have 60% of 1 or 2 small rich pipes or a dyke worth say $1,000,000,000. Its something else to have 19% of say 4 to 7 economic pipes, 1 or 2 of which are 5 to 8 hectares, maybe even 10 (like Kennedy Lake) worth say on average $6,300,000,000 or $31.5 billion all told.
If everything worked out somewhere between WOW and YAHOO as I have suggested, I would guess the up side could be anywhere between $6 and say $40 / share depending on the variables.
Who wants to buy MIY's %? DeBeers, SUF, Kennecott, BHP. Franco-Nevada?
So let's say it works out only 20% as good as that.
You would still be looking at +/-$1.20 / share.
Let's enjoy the ride.
Good Luck and Regards |
