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Gold/Mining/Energy : Kensington Resources Ltd. (V.KRT) * Diamond in the rough! -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (1722)	5/1/1998 3:13:00 AM
From: Ron Osspapot	Read Replies (2) \| Respond to of 5206

A note passed on from Buddy: we have a guest writer tonight. i received a call from david stone asking that i post the following on s.i. any new news that comes from or through me is sent to the KINGS first and then s.i. so here it is..... it is hot off the press because it is dated 5/1/98.... :-) all typos are my fault. if some- thing doesn't sound right, it is my fault..... - KENSINGTON RESOURCES LTD (KRT: VANCOUVER) AN ANALYSIS may 1st, 1998 i have been hearing a lot of rumors about kensington resources ltd. from a number of sources and i thought i would check into them to determine the facts. i personally have done the primary research into documents that are public record on this company and i am solely responsible for the interpretations and conclusions. kensington resources's fort a la corne project (kensington owns a 30% stake in the joint venture) is potentially the biggest diamond project in the world. the reasons are listed below: 1) 71 kimberlite pipes (diamond bearing structures) are held by the partners. 2) 70 pipes have been drilled and tested with 34 pipes containing macro diamonds larger than 1 millimeter. 3) many of these pipes have in excess of 100 million tons of diamond bearing material. one has almost 1 billion tons. 4) 1 cluster (5 pipes touching each other) has 2 billion tons. 5) as a comparison, diamet's average pipe size in the NWT find is 15-20 million tons. 6) kensington's maximum cost to process kimberlite material is $15 c per ton. the diamond value recovery price, according to luc rombouts, a famous expert diamond appraiser (adjusted for micro diamond grades) is between $50 and $100 u.s. per carat. let's use $75 on average per carat. the mine will produce on average 25 carats per every 100 tons or 1/4 carat per ton. this equals $18 u.s. per ton or $25 canadian per ton. revenue of $25 per ton less our processing cost of $15 per ton gives us a net profit of $10 per ton. we will process 60,000 tons per day for a profit of $600,000 per day. that's $18 million per month or $216 million per year. 30% of this or $64.8 million is kensington's share. 7) when production starts 60,000 tons per day will be processed (diamond grades are 70% gem quality and 30% industrial quality). to process the 5 pipe cluster which contains 2 billion tons at this rate will take 91 years working 365 days of the year. 8) kensington's partners are debeers (actually monopros which is debeers' exploration unit) and cameco who is closely associated with the sask provincial government . cameco has recently offered to buy uranerz for $483 million. uranerz is the operator of the project and is also a partner. 9) debeers has been in the diamond business in south africa and around the world for over a hundred years. they control the world market and are very wealthy . they do not take positions in worthless projects. they have been involved in this project and have invested in it for 9 years. they are in it because they know it is the biggest diamond project in the world. these people know what they are doing and are in for the long haul. 10)the diamond market is strengthening due to the increased demand caused by the world's population growth. however, the asian market is coming of age and china alone will ensure the sale of gem quality stones in quantities larger than the u.s. and japan combined. this project is located in an easy place to mine. there are paved roads to the property, hydro electric power is in place as is a willing workforce. the non-sensitive ecological location minimizes operation costs in that regard. 11)the 1997 tracer diamond program points out that approx 100 drill holes were under estimated in value of recovered diamonds. the latest news release approved by all the partners, if analyzed, says that the diamonds recovered from the past years drilling have been under reported. i take that to mean that there were more diamonds in the holes than were reported. as an analyst i must explore this very closely. under reported by how much? what does this mean? my off the record questions have uncovered information that indicates that approximately 80% of the test diamonds were lost in the drilling/testing procedure. this means that for every 100 test tracer stones put in the holes only 20 were recovered! could this also mean that approx 80% of the natural diamonds in the hole were not reported?? if this is the case and we run the numbers it means that this project now has between six and eight pipes that can be put into production economically. this would make it the biggest diamond mine in the world. 12)management of kensington is very conservative and reliable. the directors are successful business people who run the firm very competently. my personal position: i have put my money where my mouth is and have acquired over 100,000 shares of krt and i am still buying. who would not take a position in this firm for a share price of under $5? written by: murray tildesley, victoria, bc publisher (former financial analyst, bank of montreal, head office) a note from me.... there is no truth to the rumor that mr. tildesley is also known as currahee..... :-) i just couldn't resist....