RE: RE: RE: RE: Bought more Curvature Dude,
You are still with us! I thought you were off making money in the wonderful resurging North American economy. You gave me two criticisms to think about. Let me throw two back at you.
First, overgeneralization. I do not seem to be able to understand basic economics because I did not include two obvious descriptions of what an NPV is NOT in my post. Of course it does not include INTEREST because it is a net PRESENT value. The prefeasibility study states that in its own body, and contrary to an earlier suggestion by you, I have in fact read it. If the money is borrowed and the mine does not get built for ten years then we would drown in debt from the interest. But if we build the mine and start producing 400,000 ounces a year in 2015 we can handle a little interest. And of course the NPV does not include interest because the authors would have no way of knowing what the cost of borrowing is going to be when the borrowing is accomplished. As for the cost on a buyout, this is a valid point, but again, not one that thge PFS is intended to address. The PFS is prepared to assess whether it is feasible to turn Kiaka into a mine. That is it. It is quite obvious that we do not have the money in our account to build the mine. The cost of building a mine is going to have to come from somewhere. The two simplist forms would be either to borrow the money from a lender or two be bought out buy a larger miner who has the cash to build the mine or access to capital to finance it. You are simply stating the obvious with those two points. On that basis you conclude I do not understand economics and my goose is cooked. Overgeneralization.
Curvature, you remind me of the family law clients who complain that it is unfair to value his or her pension presently and divide it up for the other spouse, because he has not yet retired and is not yet entitled to the money. Actuaries are nevertheless able to put a net present value on the worth of a future income stream. If I tell you the actuaries say your pension is worth $150,000 dollars you can quite rightly point out that the money will only be received when you retire, that there are all kinds of variables that might stand in the way of you actually receiving the monies in the future, but you would have a hard time arguing with the concept that your future entitlement can be valued at present as being worth $150,000.
Also, I do not agree with your comment that the authors of the PFS assume the financing will be achieved through issuing of shares. There is nothing in the PFS to indicate that and it most certainly is not on the table. There are a variety of methods to finance the Kiaka mine, including streaming, financing (borrowing) and joint venturing. I suspect that in the end some combination of all available approaches will be used. Will those approaches dilute the NPV of Kiaka to shareholders? Absolutely! Is Kevin and the rest of VTR management going to be stupid about the cost of financing the mine by doing a share issue at 32 cents. Absolutely not, even if that were possible. Curvature, we can afford a bit of dilution here. We are valued at what $7.00 an ounce of gold now. So the cost of building a mine dilutes us, and we then get valued at what, $50.00 an ounce, $100.00 an ounce, $200.00 an ounce? Look, dilution is coming in some fashion. Yes the mine is going to cost money which we do not currently have. Let me use a simpler example so you and I can both agree on what NPV is and what it is not. You have a 1967 corvette in your backyard. Its body is rusted out and there are some engine problems. You get an appraisor to come in. He/she tells you that the NPV of your corvette is $20,000. That is assuming that someone somewhere is going to do the repairs necessary, but that even taking into account the cost of those repairs the Corvette in its current state is worth $20,000.00. This does not mean that you have the money in hand to go out have have the repairs done. It does not mean that you have the money in hand to advertise it, and it does not mean that if you let it sit there for six years it will continue to be worth $20,000.00. But at this point it is. I do not agree with your final statement that the NPV is a number used to compare project viability against another project viability. Where did you get that?
Second criticism to throw back at you. Your response to my post is way over the top. Be as hard hitting as you want. Throw it at me. I can take it. I might learn something. One reason I put this stuff out there is to see if it will stand up to criticism. The idea of VTR buying out Channel resources got shot down pretty quickly by the board, and that was probably dead on. They have oxide and the cost of constructing an oxide processing plant just for the additional Channel resources does not make sense for VTR. But your post is so immodest and so dismissive that you lose credibility. Again, for the most part, your post simply states the obvious, and you need not assume that because I did not include your points in my post I was unaware of them.