Thanks Nick, trying to get my head over your input, I can see it...

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mpv2

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18/06/18

14:48

Post #: 33774630
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Originally posted by nickbell47 ↑

Hi mpv2,

What I find a quick and useful means of assessing the approximate value of headlines of gold exploration is to assume a cylinder of radius 10m at 50% of the grade (as resource drilling typically ends up 20m x 20m and implying that the grade peters out at the perimeter) for the length of the intersection multiplied by POG. Therefore the first intersection this would be 314 x 2.87 x 21 x 2.2 (approximate density) x 1700 / 31.1035 (grams per oz) or $2.27M.

Despite the first intersection being a lower grade, I liked it more because it is shallow so it would not be unreasonable in my opinion to double that value and assume the rest of the announcement would cover all costs (particularly statements that "all but 1 of 38 holes intersected significant mineralisation" and "over half of the
holes are extensional in nature"). In rising from 25 to 28c, mc increased by $4.35M which matches this pretty well.

I don't have the time to apply this 'quick' method to all announcements from last year (as there were so many), that would be an interesting exercise which I'm sure all BRB posters would like to see if anyone else does. The other points I should make are that the company must follow a much a more rigorous process when reporting ounces (and is far better off spending its cash drilling more holes) also that given the typical grade distribution of gold and the relatively high A$ price it is becoming quite rare to find open pit resources with a grade higher than 2 g/t.

Hope this helps, Nick

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Thanks Nick, trying to get my head over your input, I can see it sort of logical ie adding more value to the jorc. Its just that I was taken aback by the negative reaction on the day of announcement.
Thanks for your reply

BRB Price at posting: 27.5¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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