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Gold/Mining/Energy : Pacific Rim Mining V.PFG -- Ignore unavailable to you. Want to Upgrade?

To: David R. Schaller who wrote (8704)	2/20/1998 9:37:00 AM
From: Enigma	Read Replies (1) \| Respond to of 14627

Dave/Rick: Unfortunately I don't have the resources for this. My friend had a quick look at it and the drilling results, maps, etc, That was all it was - a quick look. It was based on 10,000 tons/day, I think he used a conservative recovery rate for the silver - maybe as low as 70%, he factored in milling costs, mining costs (contracted out) and a figure for capital costs (amortised or leased I think) anyway it netted out to about $4.50/ton. I can't remember the price of silver at the time but it was a good bit lower than it is now. The recovery rate may be as high as 88% - the bulk sample will shed some light on this. From what I understand, 88% is very high, so it is probably good to be conservative. 30% of $128,000,000 is only $38,000,000 odd. I think the size of mill the orebody will support is key because the present value of the deal would be so much higher if the size of the mill could be calculated in (higher) multiples of 10,000. I don't have any personal experience of how this is determined. In other words, with 130,000,000 oz, say, could you have a 20,000 per day mill? Or higher?. The quicker you get the stuff out of the ground.....Maybe someone could address this question to Tom Strake? These are the sort of things which will surely factor into Barrick's thinking. Would they be interested in a 10,000/day operation? On the other hand, PGF could (I expect) live with a smaller operation, providing they can arrange the financing/partners. This is where the heavy hitters on the board will earn their keep! A smallish operation with the potential for finding significant additional reserves is attractive too. My early conclusion was that it would be better for PFG if Barrick walks - this is based on the premise that they could strike a much better deal with a new partner I hope you are right about $5. Of course, this could turn out to be a very large orebody. I personally don't have a feel for what the geologists think about the upside. There is some difference of opinion with Barrick about the stripping ratio. This is obviously very important too. All the best.