lol : gotcha..., page-8

re: attempted valuation... jasper_8...

No real idea of value here...but I suspect lots and lots…however, what the market will pay may not necessarily equate to what a potential suitor might pay?

I am very excited about today’s announcement…lol…you don't extend 10,000 drilling campaign out to 60,000m just for exploration...most of it will be for resource delineation in my opinion.

But what possible value?

I’ll give it a go, although will probably just embarrass myself…so before I start, let me say I am probably way out of my depth here...so please, any experts out there, feel free to comment.

Here goes...I'll assume they will eventually be drilling something like 400 holes at an average of about 150m depth...with some deeper exploratory holes, as well as a few shallower ones...this would equate to about 60,000m

More than likely however, we will end up with a mix of measured, indicated and inferred related drilling...say 25m...50m...and 75-100m spacings.

Don't forget there are an additional 37 previous holes and their maiden JORC resource, which will add to the current drilling campaign.

So...given current hits, and allowing myself to be just a little optimistic, we can probably assume an average of at least 30m of mineralisation per hole, with grades of about 1% Cu, .5g/t Au and .05% Co. (Similar to the nearby Earnest Henry)

Back of envelope figures gives us...

1. Measured resource...
25m drill spacing = 11x12 grid x150m deep = 19,800m

Area (25m grid) = 82,500m2 x 30m (mineralisation) = 2,475,000m3

Assume specific gravity 2.8 x 2,4750,000 = 6,930,000 mt


2. Indicated resource...
50m drill spacing = 11x12 grid x150m deep = 19,800m

Area (50m grid) = 330,000m2 x 30m (mineralisation) = 9,900,000m3

Assume specific gravity 2.8 x 9,900,000 = 27,720,000 mt


3. Inferred resource...
75m drill spacing = 11x12 grid x150m deep = 19,800m

Area (50m grid) = 742,500m2 x 30m (mineralisation) = 22,275,000m3

Assume specific gravity 2.8 x 22,275,000 = 62,370,000 mt

Given they have already delineated an area of mineralisation some 1.1km x 1.2km (1,320,000m2) and are talking about extending the new discovery for a further 1km of strike, I think the above total of 1,155,000m2 for the total measured, indicated and inferred drilling is achievable.

So...in summary...

With a bit of luck (we can always do with that), there is a chance that when the 60,000m drilling campaign is complete, they may be sitting on resources something like...

Measured = 6,930,000 mt
Indicated = 27,720,000 mt
Inferred = 62,370,000 mt

Total = 97,020,000 mt

Assuming arbitrary grades, based on recent results and the nearby Earnest Henry mine…
Cu = 1%
Au = .5g/t
Co = .05%

Current metal values are (23/6/06)...
Cu = US$6,800/t = AUD$9,300/t
Au = US$574/oz = AUD$786/oz
Co = US$35,000/t = AUD$47,860/t

Therefore contained metal values per tonne…
Cu = AUD$93/t
Au = AUD$14/t
Co = AUD$24/t

Total value = AUD$131/t

In ground values…

1. Measured = 6,930,000 mt x AUD$131 = $907,830,000
2. Indicated = 27,720,000 mt x AUD$131 = $3,631,320,000
3. Inferred = 62,370,000 mt x AUD$131 = $8,170,470,000

Total = 97,020,000 mt x AUD$131 = $12,709,620,000

O.K…so do I have your attention yet?

Yes…we have some pretty big numbers here…perhaps I have missed something?

Perhaps not?

By comparison, Earnest Henry Jun 05 data…

Earnest Henry: (open cut)
Measured = 48mt (1% Cu - .5g/tAu)
Indicated = 22mt (.9% Cu - .4g/tAu)
Inferred = 1mt (.4% Cu - .2g/tAu)

Total = 71,000,000 mt

Of course, Earnest Henry was much bigger several years ago.

Back to AUM…if we halve the assumed average mineralisation thickness from 30m to 15m, obviously we halve the above numbers…but if we double it…well, I am sure you can work it out.

As I said at the outset…I am probably out of my depth here…but at least the above exercise gives some kind of idea of possible high side numbers…and might help explain the apparent aggressive buying in recent weeks.

But remember…these are in-situ metal values…any tangible value for AUM and by extension, anyone else who may be interested, needs to take into account the entire project economics.

I think I read somewhere that Earnest Henry cost some $350m to develop as an open cut mine…by memory it had a favourable resource/pit outline…but none the less, a final pit diameter of some 1.3km or so, which, considering the 5:1 strip ratio, is a fair bit of waste to remove?

Anyway…it is still very much early days here…as such, they will need to keep the good intersections rolling in if the market is to maintain the current level of interest.

Given the current activities on the ground, I think it is safe to assume that for the near term, such interest will remain, suggesting numbers north of $2.00 are quite achievable in the not too distant future…what happens once it gets their however will depend purely and simply on what they keep pulling out of the ground.

An exciting period ahead.

Cheers!