2005 VL at least 1 million ozI have redone the 2005 43-101 precisely, and have included in this estimate the 2005 estimate which adjusted for the impact of the "nugget " effect on model output.
The nugget effect is due to anomalously high grades ( sometimes 3 oz/ton ) when the drill intersects nodules of high grade material.
To reduce this effect on parameter estimates, a statistical technique called Winsorizng is carried out. This technique caps those high grades and hence the derived estimates have a lower mean and better variance.
The Winsorized estimate for the 2005 estimate was 359,000 oz cf 443,000 oz for the unadjusted estimate.
Using the same exemplar as before and assuming that the ratio between 5 gm.s to 4 gms is the same as 4 gms to 3 gms and that between 1 gm and 0.5 gm is the same as that between 2 gms and 1 gm, the revised ( and best estimate ) estimate of the 2005 estimate to include gold in the assays below 5gms/ton cut-off is as follows......
...........359,000 oz at 5gm cutoff
..........453,000 oz at 4 gm cutoff
.........571,000 oz at 3 gm cutoff
.......748,000 oz at 2 gm cutoff
.......905,000 oz at 1 gm cutoff
.......1,095,000 oz at 0.5 gm cutoff
Note that the 2005 estimate was constrained by 3m blocking which will not be the case for an open pit model.
Removal of this statistical constaint will increase the above estimate.
In other words, had the 2005 estimate been done using a 0.5 gm cut-off and estimated without the block model constraint, the estimate would have had a very high probability of being above 1 million oz.
To this, we must add the much larger foot-print( and higher grades ) due to all of the drilling since then.
Results since 2005 continue to expand the boundaries of gold mineralization on-strike to the southwest and northeast, with the Deposit having now been drillied over a strike length of 750 m and results from grab samples (ranging from 49 to 79 g/t) confirming a greater than 300 m corridor of minerailzation extends the strike to the southwest.
A large proportion of the holes intersected gold mineralization on the margin or outside the current NI 43-101 compliant resource envelope, which confirms the down dip and along strike extensions of the gold mineralization.
More importantly , many intersections are near surface where no gold was reported in the pre-2005 drilling.
What is also important is the fact that the latest results from the current drill program have confirmed that the Leprechaun Deposit (the "Deposit") has a high grade heart of gold with hole VL-10-205 further defining a 200 metre (m) zone of continuous high grade mineralization (greater than 15 grams per tonne (g/t) gold in 15 drill holes that dips from near surface to a depth of 175m.
It doesnt take much tonnage at grades above 15 gms/ton to massively increase the gold estimate
A quick calculation shows at least 750,000 tons containing at least 300,000 oz of gold.
Imagine these grades in an open pit operation where the grades are typically less than 1.5 gms/ton.
So, while I might hesitate to state that the new 43-101( whih will include 2006-2010 drill data ) will exceed 2 million oz, I have no hesitation is stating that it will almost certainly exceed 1 million oz........and almost certainly will exceed 2 million oz when fully delineated.
In addition, the deposit remains open at depth and at strike and contains the potential to be world class ( above 5 million oz ). Grades will be well above open pit norms, and being found near the surface, the strip ratio should be decent, all of which points to a low cash cost operation.
Our comrades on The Rock ( FRG ) just paid $450 per oz for gold in the ground ( and at about the same stage of develoment ) in Nevada.
Applying this to VL would value that deposit......at its 2005 boundaries....at $450 million of which MOA will own 50 %, an implied valuation of at least $5 per share.
Tactically, a suitor will take out its target before the full deposit is delineated but after its commercial viability has been assured.
My advice here is to load up for what is coming our way within 2-3 months and perhaps shortly thereafter.