Post by
schocor on Jul 07, 2016 5:37pm
My 2 cents on PEA - It is step 3 of a long journey
This release was good and pretty much what I expected. At first glance the only real highlights were the all weather vs winter road cost benefit analysis and the pay back in2+ years. To put this in perspective though what they proposed in this PEA is a small, short life mine. 400 people, 10 year mine life - but it is not a world class deposit. Canadas diamonds mines in my mind fall into three categories 1> Large profitable, world class billion dollar mines (EKATI, Diavik) 2> Small or NPV negative mines (Renard, Jericho, KDI, snap lake, shore gold) 3> Small to mid size profitable mines (Victor, Gaucho Kue). What they are proposing in this PEA puts Childiak into this 3rd small to mid size profitable mine category and they would be top of that list with NPVs/invested capital ratios that FAR outweigh Gaucho and Victor. FAR. But with the exploration POTENTIAL at Chidiak they MAY become a category 1 Large profitable, world class billion dollar mine. A mine like this will probably employ 1000+ people and produce 5-9+ million carats a year and command a MUCH higher NPV and capital investment than that shown here. That prize is not simply a mine, it is a commanding share of the global diamond trade (+10%) which has (if done right) many downstream revenue generating activities. Proving out this potential will be the goal for the Freidlands and whomever comes on board as a JV partner. Rio Tinto may be interested in this as their mines (alarosa and Diavik) are nearing end of like and they already have a diamonds marketing department. De Beers could play. Dominion would/should be interested, but their recent expansion plans will consume the capital and human resources Chidiak would need. Lucara could provide some capital and might be a good (quiet) partner. Alarosa is Russian centric, but their credit rating just got increased and perhaps they are looking to expand globally. Also any mid tier miner looking to diversify into diamonds could get involved if they have capital. But finding more economic proximity kimberlites is a relatively cheap, high return exercise at this point. Peregrine has exclusive rights to the worlds best technology for finding kimberlites (the flying cylinder). A hostile offer is as stupid as calling DDCs office to tell them to buy peregrine and I can see no reason why the super rich, liquid and smart Eric Freidland would pursue a JV partnership on less an ideal terms. I think we might be in this alone for a few more years to come but it will be worth it. I think it will be 10+ years before anything is built at Childiak but I am pretty sure it will be much bigger than what they proposed this morning. Patience will be rewarded. This stock will likely increase from here, but I would not expect the 10000% returns that ABer and Diamet saw 20 years ago - the market is just not there right now and people are smarter.
Comment by
cudjo on Jul 07, 2016 5:42pm
Finally, a post worth reading, recommend 10 stars