My simple analysis for CH7 My simple analysis for CH7 is solely based on history and metrics.
History
History has shown (as Kidlapik posted recently) that PGD has a good record of being conservative in their press releases. I have no reason not to believe this again. “Dr. McCandless stated: "While a certain amount of diamond breakage is to be expected in any large-diameter RC drilling program, the level of breakage observed in this bulk sample is abnormally high. Through the work completed I can conclude that the reported grade of 0.88 carat per tonne is conservative...””
CPT
The following base case assumptions:
Kim 1 @ 1 cpt (5% of TFFE)
Kim 2 @ 0.76 (50%)
Kim 3 @ 0.94 (15%)
Kim 4 @ 1.09 (25%)
Kim 5 @ 1.31 (5%)
Add average of 25% (min of 10% to max of 40%) lost due to breakage (<1.13 mm) for Kim 2, 3, 4 and 5. Add 5% for Kim 2, 3, and 4 for grease-repellant coatings (Kim 5 was 20%)
The following resulting cpt:
Kim 1 @ 1 cpt
Kim 2 @ 1.0
Kim 3 @ 1.23
Kim 4 @ 1.43
Kim 5 @ 1.64
TOTAL @1.17 cpt - 4.35 million carats to 7.05 million carats (from TFFE)
Using a min of 10% and max of 40%, cpt ranges from 1.04 to 1.31. Very solid results IMO. Given PGD's historical conservatism, I am leaning towards the upper end of the range.
Additional factors that can favourably impact cpt or total tonnage of CH7, in addition to assumptions above:
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depth below 290 metres
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were any diamond bearing nodules intercepted, not discussed in PR
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large-sized diamonds recovered during mining operation (outliers), not intercepted or broken up during bulk sample
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small sample size of KIM 5 not reflective of in-situ
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expanded TFFE
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tonnage proportions for each KIM
Valuation
Much more difficult. Can only rely on pictures and PR and CH6. “Substantial portion of gem quality”. Not liking them greys and browns though.
If we get a valuation of US$140/carat or CAN$200/carat, in-situ value ranges between CAN$0.85 billion to $1.38 billion. Using breaking min and max, we get CAN$0.76 billion to $1.54 billion.
Addition factors that can impact diamond valuation:
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market conditions (supply and demand)
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foreign exchange rate
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modified gradation curve (proportion of larger sized diamonds) – one may exceed 6 carats in bulk sample
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amount of breakage (number of gem quality diamonds 2+ carat shattered and double of typical percentage of breakage and “partially successful” in 43 of 74 attempts)
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“small population of clean gem yellow octahedra may prove important”
Lots of information coming out in March. Would be nice to see if the people at PGD commit to exercising their rights ASAP.