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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (23492)	10/25/2006 9:33:01 PM
From: Mr. Aloha	Read Replies (1) \| Respond to of 78418

Tom -- If you want to compare the two projects' feasibility studies, you have to focus on just the reserves covered by those studies. Then you can estimate the value of the remaining resources separately and other projects separately. I know that NovaGold has interest in another project in Alaska, where they're partnering with Barrick. To compare the feasibility studies, I had to look at the bigger news release for more POM details: polymetmining.com POM's NorthMet deposit has reserves of 181.7 million short tons of 0.31% copper (plus other metals -- page 6) within Measured and Indicated resources of 422.1 million short tons of 0.276 copper (plus other metals). NG's Galore Creek deposit has reserves of 540.7 million tons of 0.557% copper (plus other metals) within Measured and Indicated resources of 748.9 tons of 0.52% copper (plus other metals). Presumably only the reserves are covered in the feasibility study. Assuming copper is the primary metal involved for both projects, Galore Creek looks much bigger. The bottom line economics of the feasibility studies have to be compared on similar terms. On page 9, POM shows a number of different scenarios, so let's take the one closest to Galore Creek's. Galore Creek uses $1.50 copper and a 5% discount rate in its base case, so using that combination for both studies, NorthMet has a NPV of $295.5 million and Galore Creek has a NPV of $599 million. Under those assumptions, the Galore Creek project is about twice as valuable as the Northmet project. However, the prices of other metals are not the same, so the NPV's are slightly off (e.g., Galore Creek uses $525 gold with the $1.50 copper while NorthMet uses $450 gold). I don't know which is a better value based on that, as you'd have to evaluate the rest of each company's projects and resources. Barrick's takeover bid at $16/share ensures that NovaGold shareholders can get at least that much for their shares (closed at $15.75). I don't know if POM has any takeover activity. I hope that helps...