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  • jde999 jde999 Aug 5, 2012 11:31 AM Flag

    F2 makes high grade deposits list

    for me its not about grade ( i know some are laughing) ... for me it about margin and its the margin fears that is stopping potential buyouts... imo and i also believe that is what they are wrestling with in updated pea.
    yes they have gold
    yes they have narrow viens but how to make it efficient....

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    • As of now RBY is a lower-risk (comparing to peers) investment to a gold exploration/development (high-risk sector) stock. Also, I agree with you that grade itself is not overly important; the same goes to tonnage and any other isolated criteria (to be more specific, RBY has high grade, but it also has $900M market cap; both must be noticed).

      Actual investment case is a comparison between stock “fair value” and present market cap (possibly, it’s something that you called “margin” in your message). RBY has low risk (fully permitted, great location, cash on hand sufficient to finish construction); it makes gap between fair value and market cap smaller than one could be typically found in peer stocks. That’s it. Anything else goes directly to individual preferences and risk tolerance. Someone likes higher (than in RBY) risk and for others RBY risk is already too much.

      Also, I would like to add few words about “fair value”. It is something that can be found in an economic study (if it is available). RBY has PEA only, so PEA numbers (NPV) can be used for this purpose. One may also make projections about NPV growth; again it comes down to personal taste and/or experience (how to make these projections).

      • 1 Reply to warmcamp
      • As to NPV, as to any calculation, the old adage of garbage in, garbage out applies. If there were some reason to believe the grades were correct your point would be valid. However, in most extremely high nugget effect deposits (deposits with a very high coefficient of variation) grade is uually understated by the methods applied to date. According to Dominy, there's not much reason to think the tonnages are off for the material that's been estimated so far. But, there is very little to no reason to think the grades used in the PEA calculations will bear any more resemblance to reality than the 43-101 grades for Campbell and Red Lake do to the actual production at those mines.

    • As per Mr. Lalonde at AGM, Goldcorp's Marlin mine used the same method as costed in the original PEA until they changed over to the narrow vein, long hole boring method and quadrupled production.

    • Again, I'd just look to the deposit that seems quite similar next door. The Campbell mine hasn't had any real problem with margins over its long history. When you read the latest 43-101 and the immediately prior 43-101 for Campbell, you find that the widths are actually quite similar to those F2 exhibits.

    • I'm not laughing, you got it right. Grade is immaterial to earnings, only production builds profits. How much profit, barring accidents, is as you point out, is completely dependant upon cost, and volume of production/life of mine.

      Eight years ago Apollo Gold sold two developed and operating Nevada mines with 750,000 P&P for only $14 million, and dumped that money into a five year struggle to get a feasibility study for their "coarse gold" HG mine at Black Fox. The justification for that move was the "low grade" of the ore in Nevada.

      Although Brigus has done a commendable job IMO in turning the project around - their underground production during the quarter had an average grade "TO" 5.28 gpt! I don't know if you can find them but when Apollo owned the mine their Black Fox drill results came back with grades in the multiple oz. range.

      Having been through the Apollo debacle and learned a very expensive 5-figure lesson (CEO's lie)it shouldn't really be any wonder that I rely on P&P reserves rather than just grade. IMO we should be more focused upon distribution of ore than local concentrations that can be substantially misinterpreted by the novice gold mining investor.

      b.

      • 1 Reply to bogfit
      • Well, I don't know about you but I remember running the average weighted grade and widths at Black Fox and looking at the stripping ratios and realized it was going to be a tough road to hoe. Yes, they had some high grade. But, they didn't have much. Anyone who bothered to run the numbers on the drilling for themselves knew that at the time.

 
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