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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: salva who wrote (1138)	4/9/1999 9:09:00 PM
From: Fishfinder	Respond to of 3558

Thanks for being so straight on this guy salva. I also noticed his style from his profile list. regards Scott

To: salva who wrote (1138)	4/11/1999 8:05:00 AM
From: mineman	Read Replies (1) \| Respond to of 3558

Kilborn's April 1998 feasibility report concluded there is 10 million tons containing 3.7 mil ounces in the “ore reserve” category within the main vein (which contains 95% of the gold). This includes 2.8 mil ounces of “proven” and .9 mil ounces of “probable” reserves. Sutton's 1998 releases said they had 7.7 mil ounces of gold, without saying only 50% of this was in the “ore reserve” category and 50% in the “resource” category below 2,000 feet depth that has only been intersected with a few widely-spaced drill holes. Sutton's new supposed 1.1 mil ounce “find” is also in the unproven “resource” category which still leaves the main vein with 95% of the known “ore reserves”. Barrick in announcing the Sutton takeover did not use Kilborn's 3.7 mil ounce figure but rather Sutton's promotional “resource” figure of 7.7 mil ounces plus 1.1 mil ounces of the recently added resource for a total of 9 mil ounces. Barrick announcement made it appear that the deposit had 9 mil ounces of drill-proven ore-reserves ready to mine whereas the true figure is only 3.7 mil ounces with a further 5.3 mil ounces of “indicated” reserves that need to be infill-drilled to up-grade them to the “reserve” category. This is important as the very few drill holes below 2,000 feet depth show that the indicated “resource” below that depth only grades .3 ounces per ton ($90 per ton) over fluxuating widths from 2 to 20 feet. With the high-cost of shaft-sinking and development below 2,000 feet these resources appear to be too low grade to economically mine at $280 per ounce gold. I think Barrick management were persuaded by Sutton managers into accepting Suttons figures rather than having Barrick's own technical people assess the project. Barrick were also persuaded by Sutton to waive the due-diligence clause so Barrick were locked-in and could not change their mind no matter what their technical team uncovered. In contrast to Sutton's veins which do not come to surface the Rangold/Pangea reserves for which Barrick paid only a small percentage of the $520 mil Sutton price, are close to surface and easily extractable. Ashanti did their own in-depth assessment of the Samax project before buying it and they were not “duped”. Only time will tell if Barrick management were “duped” into spending $520 million for this low-grade high-cost underground vein in remote Africa!

To: salva who wrote (1138)	4/11/1999 8:54:00 AM
From: mineman	Respond to of 3558

Besides the April, 1998 Kilborn study another independent analysis was done on the project. It estimated there is less than 1 mil ounces of feasibly extractable gold in the main vein, not 2.8 mil ounces as Kilborn determined, because Kilborn's analysis was done at a higher gold price and the lower price of $280 per ounce would mean that one end of the vein is too narrow (2 to 3 feet), and the other end too low grade (.18 ounce per ton), to economically mine. The report also said the vein's relatively low grade of .3 ounce per ton below 2,000 feet would make it uneconomic at $280 per ounce gold. This leaves less than 1 million ounces of possibly economic gold in a limited area of the main vein plus ore from other pockets of the main vein and other zones which would bring the total up to 1.5 million ounces. At $280 per ounce gold this is $420 million gross metal value before mining, milling and shipping! Other things apparently mentioned in the report were: - the declining gold price continually reduces the size of the main vein that can be economically mined, - underground mining development costs will be high because of the large planned tonnage, - power requirements and milling costs will be high as the ore has to be ground extremely fine to release the gold, - the costs of milling and shipping the copper concentrate which contains 40% of the gold will be high, and - Tanzania has no skilled underground miners which would be needed to keep the large number of working stopes operating to feed the mill. I will try to find out more about this independent assessment.