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

To: Don craig who wrote (8797)	2/25/1998 8:30:00 AM
From: Bill Jackson	Respond to of 14627

Don; Conservative methods to estimate the gold have resulted in the low numbers we have seen. With silver paying the way the economic zone gets somewhat larger and we might make 1M, maybe more. Do not forget that when you make a tonnage estimate you have length, width and depth, as well as grade and cutoff grade, and stripping ratio to play with. If you "protect" mother Barrick by being 10-15% too conservative on each of all those parameters and deposit of 100 units can be reduced to 35-40 units. And all your numbers can be defended, however since they are all multiplied together they really add up. So if you have 5 factors all set at 1 to get a true deposit of 1, and then reduce each of thos to .9 you get a deposit of .53 relative size. And then if you burden it with a bigger stripping ratio and a higher cutoff you can easily reduce it to .40 of true size. It is the job of management to get the truest estimate of the values, reserves etc, and I suspect this will take some time, as some DD holes will be needed to compare with the sea of RC holes,(all of which are underreporting by 20-50%). Once few DD twin holes have been done and those corrections applied to the RC holes all over the place you will get a far bigger deposit. This will go along with the extensions of the deposit within diablillos and the new lands just bought. The aggregate of silver and gold makes this an economic deposit right now. The 91 million ounces from the past seems sure to get to at least 150-175 M ounces of silver, and perhaps even more after the RC/DD corrections have been applied. If you take a 50:1 silver:gold ratio we are there already. It matters little that it is silver, in essence it is money, and well worth waiting for the value to develop. Look for a "steal" in mid march. Bill Nobody walks away from a deposit like this, so B will not walk away.

To: Don craig who wrote (8797)	2/25/1998 8:56:00 AM
From: Quickdraw	Read Replies (2) \| Respond to of 14627

Hi Don, you asked for it, I throw this out for discussion purposes: Barrick must make a decision soon, likely after this 7,000 meter program has completed and they perform an internal resource estimate, so I'll say in a May/June timeframe, perhaps July. One of my main reasons for choosing this timeframe relates to Tom Shrakes key comments at Message 3374680 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ "our view on the deal with Barrick is as follows: Barrick must make an expenditure of US$10.5 million on or before July, 2000 and make a production decision to maintain their interest in Diablillos. A production decision is defined as a thorough feasibility study and capital budget. Barrick has the right to assign their interest with our consent. Our right to grant consent is absolute and there is no "reasonable right to withhold" clause. These issues are defined in the Articles of Association of the holding company. Should Barrick fail to make a production decision by the year 2000, they must sell their interest in the project back to us for $10,000 or invest US$4 million per year until a production decision is made. " ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ We talk about the fact that Barrick must prepare a feasibility study before July, 2000 but Tom Shrake has on a few occasions indicated a feasibility study will take over a year and I would imagine a thorough one will take even a bit longer ... one can presume that a feasibility study costs big bucks also ... so why would Barrick even attempt to do one if the resource proves to be smaller than their minimum ... Samantha in one of her latest updates to the thread has indicated Barrick has not even started a feasibility study ... would Barrick hold on just to cheese PFG management off ... I think not? Now, their decision must be one of four choices (are there any more?): 1) Make an offer to PFG for their 30% plus any of the bordering properties. (most likely) Note 1: The Fantasma property in my mind, was a sweetener added to the pot to entice Barrick to make the proper decision! Note 2: Barricks minimum for a gold resource is typically 3 to 4 million ounces but in this special situation, where the amount of silver and its extraction rate is so high they have actually lowered their level to a minimum of 1 million ounces of gold (or perhaps a little bit less) because of the high amount of silver credits. I ask myself are they near this ... if not why are they still drilling? 2) Attempt to sell their interest in Diablillos to a third party (PFG can match) Note: I am struggling with how this one might play out, any further thoughts would be welcome. - The key here might be this, are Barrick and PFG both searching out purchasers for the same property (Diablillos) and who has the most to offer (remember that PFG has some important surrounding properties): It is already a known fact that both Barrick and PFG talk in terms of high quality gold properties, therefore one can assume both parties will attempt to sell their interest at some stage. Now, if you were a buyer of resource properties, would you prefer to negotiate with a company like Barrick who is renowned for their tight-wadded-ness or PFG if they were 100% property owners with these key properties bordering the Diablillos. Who knows what kind of negotiations are taking place behind the scenes. 3) Make a decision to move on with the feasibility study which would indicate their minimum has been met. (I doubt this as typically Barrick dislikes joint ownership) 4) Drop the project altogether expensing as a "cost of doing business" exploration. (possible but unlikely) Like I say, I throw this out and would appreciate any comments! Rick