finding a vein

I've shamefully copied this from posts over at DRA. John thanks Plough who penned the original in regard to RMS, and I thank Plough (and John). It seemed to me it might provide brain food for us CGT holders, a spark for some comment perhaps.

regards,

fredo



'I really liked this post from PLOUGH on the RMS thread. It equally applies to DRA and could be of interest to those scratching their heads about DRA's reserves/ resources status.

"Using NPV for RMS (likewise for any well run/ cashed up narrow vein miner) will result in a discounted value.
The reason its going to be discounted is that a well run narrow vein miner will not need to prove up a JORC reserve a JORC reserve is a pre-requisite for a NPV and thus a BFS for banks, in fact if it (the narrow vein miner) does prove up a JORC reserve for more than 2 years of production it is wasting cash doing so as it will have to drill at very close spacings to hit the narrow vein and get a reserve and will be drilling from a platt in a drive at a considerable distance up dip from the vein which increases both deviation of the drill and the possibility of locating the vein
It will instead drill for structure and mine for grade if it is well run.


I was explained this philiosophy by Les Davis of SLR several years ago and it has proven very lucrative for me as it seems fund managers dont understand the philosophy which makes narrow vein miners a discounted buying opportunity for retail investors and the few savy funds like Sprott asset managment and Baker steel.
This is not investment advice

Having a valuation degree based on natural resources and commercial realestate it was hard for me to accept that a NPV was not a prerequisite for making an investment decision in narrow vein mining but I have to realise mining engineers tend to have more understanding of a mines potential than a banker will ever have."

Cheers
John'