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Gold/Mining/Energy : Naxos Resources (NAXOF) -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (8118)	1/14/1998 1:41:00 PM
From: mark silvers	Read Replies (1) \| Respond to of 20681

Henry- Here's a question for you. Since the threat/perception of increased production is always a possibility, wouldn't the market have to give SOME value to those reserves? I mean, since naxos could always juice up production either via technical enhancements, or adding production capability, wouldn't the market would be forced to acknowledge that possibility by giving it some value? Also, what would the prospect that Naxos could always JV with a major and/or be purchased by some other large organization, do to those reserve projections? It's not like they are going to give them away for free, so they would have to have some value under those circumstances also... Also, since Ledoux hs certified the presence of platinum at Franklin Lake, let's use platinum as a example in this scenario. Right now, the platinum mkt is much smaller than that of the gold mkt. I would think that the announcement of a large platinum find would make a significant dent in that market as you near production. I would also believe that the industrial uses of platinum would grow that market significantly as industry figures out the many applications of that metal with a cheaper cost basis. My question is this. How do future valuations bring into account large sea changes in the underlaying security? Wouldn't they have to allow for some valuation based on the fact that there is no way to tell if far greater amounts(or lesser for that matter)of metals can be brought out without disturbing the price structure as an industry changes or matures? Thanks in Advance Mark

To: Henry Volquardsen who wrote (8118)	1/14/1998 1:48:00 PM
From: Art Pesner	Read Replies (2) \| Respond to of 20681

Henry, interesting analysis except I disagree with using a 6% interest rate. As this is obviously a very risky situation, a much higher discount rate should be used (15-20%)? Just trying to get some use out of my MBA and CFA. Art

To: Henry Volquardsen who wrote (8118)	1/14/1998 1:56:00 PM
From: Tom Frederick	Read Replies (3) \| Respond to of 20681

Henry, I follow your math, but the market will likely follow another route to determine value. If your analysis is correct, then how did the Bre-X stock reach $230 per share on 70 million ounces reserve estimated even before real proof (recovery operations and independent testing and certification)? The FL property will provide a unique scenerio for mining. Any size scale up will continue to be profitable even with falling PM prices. For the sake of arguement, let us take the next step from Kim's post regarding the fact that certification has already happened for Platinum so we know that it is there. Even if the best the Johnson method can do is to continue to produce around 2 opt on Au and another 1 opt on Pl and Pt, then 4 opt with $150 cost per ton would result in a $37.50 rough cost per ounce for recovery. Scale up could continue with multiple partners until the costs of these metals sank below $100 per ounce and it would still be profitable. So, scale up is a very viable and profitable route to take. And we are talking about Cecil B. DeMill scale up like the industry could not before even consider due to costs. In addition, the value will not only be a function of what can be mined over the next "X" years, but also the constant dividend on an investment that will pay out over many generations. How much is that worth? Something more than the yearly ore output. CBS just paid way over the market for the NFL broadcast rights. Why? Mostly two reasons. One is that the NFL gets the highest audience viewship of any other ongoing TV event or show. Second, NBC had it and they wanted it in order to gain a general competitive edge over NBC. The price will be a function of the bidding war that will begin when the size and scope of impact of the FL property is understood and major investors and partners will not be able to afford NOT to be part of the unending FL dividend providing them with a competitive edge in the year end ROI and dividend review. If the Johnson method proves to be the most sound scientific method of recovery of these type of ore bodies, this all new method of recovery will BE the PM market barometer. And if Naxos owns the method, ipso facto, it becomes the central focus of the PM market in those categories of metals found at the property as there are NO other entities which can compete on either volume or profitability at ANY price. You have several very interesting points, but the forward looking intangibles will play a very large role in the valuation of this property. Regards, Tom F.

To: Henry Volquardsen who wrote (8118)	1/14/1998 1:58:00 PM
From: Jan A. Van Hummel	Read Replies (1) \| Respond to of 20681

Henry, I want to look a little closer at what you state tonight. Just a quick observations. The size of the deposit as such will have limited bearing. The value of NAXOS stock will be a function of the stream of income that can be derived from the deposit. It will make a material difference whether the eventual mine will process 5000 tons per day, 10000 tons per day or 20000 tons per day. As to the reserves you quote some factors. Two points: 1) True, 200 years out will be meaningless at PV; however, 2) you have to consider inflation as well, which will improve the discount factor. Given the potentially low cost of operation due to the high Au content I would argue that whatever Naxos could produce would soon displace existing mining production rather than add to it. Naxos will bring down the cost curve. High cost mines will just have to close. JMHO Jan

To: Henry Volquardsen who wrote (8118)	1/14/1998 3:56:00 PM
From: Larry Brubaker	Read Replies (1) \| Respond to of 20681

Henry: I could quibble with several of your assumptions like using a 6% disount rate, which is a rate that would normally used to discount a risk free investment. But probably the most questionable assumption you make is assuming a homogenous 3opt on a billion tons of ore. The more we learn about the desert dirts, the more we find that the deposits are not homogenous. Maxam has reported assays from less than .05 opt to over 1 opt. There is speculation that there is considerable variation in IPMCF's ore (although several months ago everybody was assuming it was homogenous). It seems to be quite a stretch to assume a homogenous 1 billion ton ore body based on a 20 foot sample from 1 drill hole.

To: Henry Volquardsen who wrote (8118)	1/14/1998 4:01:00 PM
From: KRosenfeld	Read Replies (1) \| Respond to of 20681

Henry, I believe that this is your work and I have a question. "The one year factor is .943396226415094 and says the market would value first year reserves at $471,698,113. The 30 year factor is .174110130910634 which gives a value of $87,055,065. The 200 year factor is .000008686142443 which gives a value of $4,343. The 356 year factor is .000000000979743 which gives zero present value. So close to 2/3 of the reserve would be so far away on the production curve that their current value would be zero. " Henry, Why are you using 15 sigfigsfor the first 30 years factors, but only 10 sigfigs for 200 years, and 6 sigfigs for 356 year factor. VERY SLOPPY:~). Ken