Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Winspear Diaminds (Bulls Board) -- Ignore unavailable to you. Want to Upgrade?

To: teevee who wrote (374)	2/6/1999 1:12:00 PM
From: Tomato	Read Replies (2) \| Respond to of 1172

There have been several people who have used NPV analysis to argue that if WSP has anything over a 10 or 20 yr supply of diamonds that any diamonds retrievable after 10 or 20 years should be irrelevant to the value of the stock. The logic, I guess, is that after 10 or 20 years (depending on the writer) the value to the stock disappears, I guess. This has never made much sense to me. Imagine, e.g., that WSP has 20 million tonnes of open-pitable kimberlite of the grade and value we've come to know and love in 2 separate locations, each capable of being processed at 5000 tonnes a day, but not simultaneously for one reason or another. Assume the max. 10 yr figure for NPV purposes. It seems to me that the NPV argument would be that one of the 2 locations would be worthless, since WSP couldn't mine both of them within 10 years. This is ridiculous. Couldn't WSP sell one of the sites? Sure they could! And if NPV of deposits mineable more than 10 years into the future is zezo, why did Inco pay so much for DiamondFields? I think there's a major flaw in NPV analysis. Comments? (BTW, this is by no means meant as a slap at Maintenance, who has so generously spent his time providing the threads with his skill at providing the NPV values. I just want to examine the raison d'etre of NPV analysis