Yes Will, I feel that the 1600t bulk processed by Debeers was too small to peg a value for the over all deposit.
It was too small for a reliable appraised value. It could have been sufficient for a modelled value. I think th issue is, was De Beers too conservative with its estimate.
I may not remember the timing correctly and I'm too bust to check, but I *think* the more conservative approach came after De Beers put out a rosy forecast for the Fort a la Corne play, then had to lower its prediction dramatically a year later. That prompted a move toward more conservative numbers, I think.
I think that may be why Debeers is going to bulk Tuzo, the more ore to value the more closer you may get to the over all project value.
Basically, I think so too. I was surprised they omitted Tuzo from the last few tests.
We must also expect that taking a larger sample could deliver a lower over all value.If that were to happen Bloomfield would have his day in the sun.
A prudent worry, I think. It can go either way.
My bet is that the 10ct stone was no fluke and that the deposit could produce them more often then expected.
That pertains to the degree of conservatism discussed above.
Another factor is the future value of increasing diamond prices.I think that Debeers is much less interested in the present value of GK,but is very interested future value.If the 15% IRR were to be achieved by rising prices by mine opening,yet not offset to the same degree by rising costs then Debeers would do very well.
Yes, it would. That's undoubtedly a consideration. There is also a risk in assuming the future will be rosy. There are unexpected events that can unfold, leading to a nasty surprise. As I recall all too well, I was sitting at my desk four years ago, making a post about Mountain Province, when my wife came in and said planes were crashing into the WTC and the Pentagon. I finished the post, thinking she must have really bolluxed some disaster movie into a real news report.
We must remember that Debeers raking a 15% profit of GK yrly,then taking those profits and finding a place to deploy those profits again at a 15% compounded rate over the mine life,would produce a far greater profit for Debeers by the time GK shuts down.
Sure. We must also remember that De Beers Group could make over $250-million (U.S.) just marketing the Gahcho Kue diamonds. That a good motivator. They can presumably charge that expense against the mine, lowering its profits and cash payments accordingly.
That future value is what many long term companies look for be it property investments or diamond mines. That is the very reason Debeer would want to buy MPV share of the ore,so they would get the benifit of deploying MPVs portion of profits IMO.
The bottom line is the bottom line. A good accountant, familiar with the tax laws and accounting policies covering mines would be able to say whether Be Beers would be better off owning all the play, or just part of it.
It's all about numbers, and we don't have access to enough of them. That uncertainty is what makes for an ample supply of buyers and sellers, of course.
After 10 years, I'm certainly hoping it works out for you.
Regards,
WillP |
