Julian Baring's rule of thumbRobert Freidland made mention of it at an investment conference in March:
In our last mine planning resource in August 2004, we had 80 billion dollars of metal in the ground at then current prices. We are going to be updating this resource in mid April. But let’s say we have 100bn dollars worth of metal, just to come up with a rough number in the ground. We sold Voisey’s Bay for 42% of gross metal value at 4.2bn dollars, it was a bit of a high watermark. But old Julian Baring at Mercury Asset Management used to say, if you've got a world class discovery that's big enough to excite the lust of the majors, and if your revenue per tonne is 3 or 4 times the operating cost per tonne, so there's a delta there to amortise a profit, and amortise the capital, then these things are worth 10% of the gross metal value in the discovery stage. And Julian Baring used to provide the mother’s milk of finance to take these new discoveries through the bankable feasibility and he would exit at 20% of gross mineral value.
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