RE:My simple analysis for CH7 Forest through the trees
I have a good vibe that Tom, Eric, Robert, the BOD and management have the foresight and the shrewdness if and when they choose to proceed to the next phase of financing (equity and/or debt, external and/or internal) it will be based on a fair valuation under a “normal” economic environment under “a mining scenario”, which is significantly more than the bottom floor numbers of NPV/IRR the PEA of CH6 and CH7 will spit out. Plus with full consideration for what's below current depth, plus what's in the ground at CH44, plus the other potential and current diamond bearing kimberlites in the diamond district at Chidliak, plus Qilaq. No freebies here.
Robert is a mastermind of using “leverage”, “timing”, and “sales skills” to its maximum and I hope the BOD looks after the little guys that financially and morally supported this journey to date and are in for long haul.
If this means putting the district on hold and keeping the mineral rights in good standing order for the area and tucking the project away for 1 year, 2 years, then so be it.
Quietly and for quite a while I'm thinking to myself the same thing that someone finally had the b@lls to say out loud. Paraphrasing the CEO of Air Canada, we will no longer be providing monthly capacity figures...we had a plan...we've followed the plan...and will continue to follow our plan...f@ck the short term holders looking for a quick buck....f@ck the short sellers....f@ck the manipulation....if you believe in us and our plan and what we have....you long term holders will be rewarded....if you don't, take a hike....and more Canadian and US public companies should strive to generate long term shareholder value with out being punished by short term fluctuations due to whatever. And the stock dumped and I laughed. Good for them.
How does this relate to PGD? I just wonder if PGD management is quietly doing the same, whether intentionally or unintentionally because of whatever. There is a forest through the trees. Some people can see it, some can't, some won't, some are looking the other way. I just don't know.....nor do I care. But, the forest might be dead or it might not be.
See, I can say what I want because I can. Mike can say what he wants because he can. Oiltar can say what he wants because he can. Gauwd can say what he wants because he can. Kodi can say what he wants because he can. PGD can't say what I think they want or what they think, because they are either restricted to do such or they choose not to. But actions speak words. And putting your own $ in, speaks loud words. I think I know what's in the ground, I think some others know what's in the ground, and I think PGD know's exactly what's in the ground.
My preliminary opinion, mathematics, model, and estimates stands at an in-situ value of +/- $7.5 CAN Billion for CH6 and CH7 alone (to full depth >250 and 290 m respectively) and >$1.2 CAN Billion NPV (7% discount) in a MINING SCENARIO. I need a couple of days or so to read between the lines of the latest press release to see what is reasonable and what needs to be added/modified to my model.
All IMO. Know what you can afford to lose, stuff happens. As a wise old man said today, do your DD and let any decision be yours. For Gauwd's sake, PGD, add to Gauwd's legend by enjoying or leaving a lucrative asset to his grandchildren.
Normal Guy
PS: In this PEA, I look for 3 things a) a solid NPV b) a solid IRR and c) any technical tidbits. Albeit, all signs suggest moderate to very conservative estimates by myself and others who have studied the data and see a lush forest through the trees. Although many others (investors, partners, the banks, etc.) will use the above to put a risk factor and valuation on CH6 and CH7. Me, it is completely irrelevant because there are rules to be followed in the PEA. I call it “a basement floor guidance”. Build and market the “whole” house in any direction PGD chooses to proceed.
justanormalguy wrote: 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.