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Gold/Mining/Energy : Canadian Diamond Play Cafi -- Ignore unavailable to you. Want to Upgrade?

To: Bloomfield who wrote (4787)	11/22/2006 7:30:03 PM
From: debvan	Respond to of 16207

I hope you don't mind if I wade in on your conversion, I know that I am terribly out gunned in background and relevant formal education but I just cannot resist. The main issue here is not one of debt vs equity, but the low diamond values coming out of GK. If the value doesn't come up over the next two years, De Beers may very well decide to put the project on ice. An IRR of 3.6%, or even 6%, doesn't cut it. A conservative estimate of IRR giving a 3.6% return; why doesn't it cut it? ---- From De Beers point of view the returns will be that much higher --- revenues from processing through Snap Lake, revenues from marketing, revenues from financing ..... As you have repeatedly stated, De Beers will benefit form this project to a greater degree than will MPV. The 15% hurdle which you state so frequently is an absolute trigger in the JV agreement, at 15%, the project must proceed to feas. and mine development otherwise DB is diluted to 30%. I am confidant that revenues will exceed estimates; to be proven when the stones come out of the ground and not before (they throw out the outliers when modeling but not when mining). I must add, for honesty's sake, my cost base is zero on this investment. I can afford to be confident. DebVan