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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (76871)	3/26/2008 1:49:52 AM
From: The Vet	Respond to of 116555

It is neither a liquidity issue or a solvency issue It is valuation issue Isn't every price that is set a valuation issue? Valuation is subjective and set by the market place. Bonds, CDOs, SIVs, even the fiat currency itself has a value set by the perception and willingness of the buyers and sellers. Liquidity and solvency follow, not lead, valuation... Mish the purpose of having a feasibility study performed by independent experts to a NI 43-101 report standard is to provide investors with a reasoned expectation that the reserves stated have been proven to exist to a reasonable degree of certainty by a set of rules determined by the regulators and that the metal can be mined profitably at specific and realistic prices after allowing for all costs incurred in mining that ore body. All these numbers have to be signed off on by recognised independent experts who do the study. I am sorry but your comment " Until that gold is actually mined there will be doubt it is there and/or it can be profitably mined. What happens if mining costs rise by 1000%" seems to infer that you really don't understand mining economics, the difference between P&P reserves and resources or the specific requirements of the NI 43-101 standards. These standards were designed to eliminate the possibility that companies can claim to have reserves that are not really P&P or merely indicated or inferred resources which are not explored to a sufficient degree of certainty and/or have not had a full metallurgic and economic study performed. The full study is usually referred to as a bankable feasibility study (BFS) and to be bankable it always has to include the engineering details and estimated economics of the mine with probabilities calculated to a standard set by NI 43-101 or similar, as mandated by the controlling authority for that public company. The terms may seem similar and I admit many companies seem to throw numbers of the millions ounces of gold they claim to have in the ground without a specific designation, but no real comparisons of any mine, ore body or exploration stock can be made without a full understanding of the differences. It could be said that a proposed mining operation with P&P reserves and a BFS to NI 43-101 standards is every bit as sure as an AAA rated financial instrument and that far more work and care are expended in proving up and completing a BFS to NI 43-101 than ever goes into an AAA financial rating.