Kaiser Bottom Fish OnlineFree trialNew StuffHow It WorksContact UsTerms of UseHome
Specializing in Canadian Stocks
SearchAdvanced Search
Welcome Guest User   (more...)
Home / Companies / KRO Focus
KRO Focus
KRO Outcome Visualization Project Index
An Outcome Visualization Project is an attempt to visualize the potential outcome of an exploration project in terms of both what the deposit might look like and what it might cost to mine. The goal is to define one's expectations with regard to an uncertain outcome and quantify its potential value so as to enable the placing of high risk high reward bets on publicly listed resource juniors that have earlier stage projects for which an economic study has not yet been published. This requires making assumptions with regard to about 30 variables that define the deposit and the costs to mine it. These assumptions are run through the discounted cash flow model using life-of-mine averages to generate the after-tax net present value (NPV) and internal rate of return (IRR) figures the mining industry uses to value a project. The discount rate used to calculate the NPV is derived from the risk levels the visualizer assigns to each of a set of risk factors. The visualized outcome is in turn adjusted to a fair speculative value range based on the exploration stage of the project using the uncertainty ladder that forms the basis of the rational speculation model. The OV Chart also includes a Market Speculation Value channel which mimics the "irrational" tendency of market valuations to overshoot the fair speculative value during the target testing to PEA delivery stages while the ultimate outcome is most uncertain but remains open to the imagination. This is the famous Market Cycle S Curve which kills the shorts during a discovery play and tortures the value hunters later in the development cycle when the project typically trades below its fair speculative value until it finally achieves production. The visualized outcome is recalculated every day using prevailing metal prices.
It is essential to understand that the assumptions behind an OV are best guesses based on the available published information about a project and the visualizer's broader understanding about the risk factors and mining costs. As such an OV is subject to revision as new information becomes available which may have positive or negative implications for the visualized outcome. An OV is intended to bridge the gaps between the publication of 43-101 reports that provide resource estimates and economic studies signed off by qualified professionals. Once a new resource estimate or economic study has been published by the company all open outcome visualizations become obsolete and the OV Project is closed.
The OVP Index is a list of all projects for which Kaiser Research Online has undertaken an outcome visualization. The name of the OV Project (Eskay Mining - SIB-Lulu as Eskay Creek II) links to an unrestricted summary report for the project. A full report which includes all the input assumptions and is only accessible to active KRO members is available through the Current OV date link (ie for SIB-Lulu - April 6, 2017). An OV Project can have multiple OV's, but only one can be current. The current OV is archived when a new OV is posted. The ipv chart above plots the market spec value ( S Curve) and fair spec value channels in terms of project outcome value in 100% terms. The chart below portrays the MSV and FSV for the project outcome in stock price terms where fully diluted and net project interest are assumed constant. The blue star shows the stage of the project and how the market is pricing it on a 100% project ownership basis. The project value graphic is based only on the Outcome Visualization. The value per share graphic includes the fully diluted and net interest variables of which fully diluted changes over time. It is provided so that investors can easily see the potential stock price trajectory if the project works its way through all the exploration stages with the projected project value outcome intact and without further dilution of the stock or project interest.
The outcome visualizations help John Kaiser understand the upside or downside potential of resource juniors so that he can make better recommendations. Assembling a plausible outcome visualization involves a fair amount of work, which means that one individual can only generate and cultivate a small number of outcomes. So John Kaiser came up with the idea of creating an online portal to which anybody can sign up as a member, and which makes it easy to input all the variables, run the DCF model with a click of a button, and either save it as a private OV the member uses for his own trading strategies, or "share" it to the company's project node within the portal so that any member can review the assumptions, comment on them, or even clone the outcome visualization, tweak the assumptions, and also share the result to the project's public space. This sharing activity would be noticed by other members who could look up the project and check out the alternative visions of where the project will end up. A member could choose to follow the project, which would seat that member as a "spectator" in the "stadium" surrounding the "arena" , and then choose to follow one of the outcome visualizations shared into the project arena. Everybody would see the relative popularity of the gladiators, and also be able to see who is following which gladiator. The portal would forbid members from revealing their true identities, a prohibition that makes sense when the portal's disclaimer declares "any member who shares anything is assumed to have a conflict of interest and an agenda of influencing the market and the behavior of everybody else". All members start out as untrusted with zero credentials and zero reputation. Each member's reputation evolves through their public actions, all of which are preserved by the system and available to other members through analytical tools. The underlying concept is that in order to profit from one's conflict of interest by sharing visualized outcomes or comments into the public space, a member's action must draw the attention of other members and be respected. Thus while everybody would like to behave badly, doing so will not evolve a trusted reputation. John Kaiser believes that if an online system existed which turned the crowd into active "analysts" and "promoters" the result would be a rich eco-system that would give extraordinary visibility to the resource juniors. This idea also intrigued Andy Greig, the former head of Bechtel's global mining unit, and provided the initial round of seed capital for The Share Collective which reached the beta testing stage in May 2017. If you are interested in the concepts behind The Share Collective, check out John Kaiser's September 2016 Mines and Money presentation: A Crowd-Sourced Model for Valuing Exploration Projects.

Outcome Visualization related Resources
Tthe links below explain the rational speculation model which allows one assign a current value to the value of a visualized outcome. The main thing to grasp is the uncertainty ladder defined by the exploration-development cycle of a resource project. The exploration-development cycle is an information gathering process that starts with the highest uncertainty at the grassroots/conceptual stage and gradually constrains the physical nature of a deposit and its cash flow generating capacity as an operating mine. If you understand that knowledge about a potential outcome undergoes a reduction of uncertainty with each stage of the cycle, and recognize that this results in a shrinkage of the range in which the potential outcome's value can fluctuate, then you can appreciate why outcome visualization within the context of the rational speculation model is the key to gambling on resource juniors before they achieve the stage of a delivered economic study.
Rational Speculation Model: an IntroductionAn older article (it uses diamond exploration as an example) that explains the "difference" between gambling and betting on publicly trade resource ventures.
Rational Speculation Model: 3 Step Application to Mineral PlaysMore detailed description of the rational speculation model - note that the concept of a "probability" ladder has now been replaed with the idea of a "uncertainty" ladder, though the stages and probability/uncertainty rainges remain the same.
RSM applied to Diamond PlaysThe inspiration for the rational speculation model came from my experience of the diamond boom during the nineties where we analysts struggled to understand the valuations the market assigned to Dia Met and the field of diamond area play juniors.
PDAC 2009 Diamond Technical Session: a market pricing model for publicly traded diamond exploration companiesThis presentation takes a detailed look at how the implied project values ranged during each of the exploration stages for a number of major diamond juniors such as Dia Met, Aber, Tahera and Winspear.
43-101 Economic Study based Operating Rates(KRO Members Only) List of operating rates and associated USD capital and operating costs reported through published 43-101 economic studies. Grouped by mining type (ISL, Open Pit, Open Pit/Underground, Underground) and sorted by daily operating rate in descending order for each group. Includes links to supporting technical reports.

OV Project: Azimut - Eleonore South
Location: Canada, Quebec, James Bay
Stage: 3-Discovery Delineation (Gold)
Project OV posted: Sep 8, 2016, Current OV: Sep 8, 2016
OV Project: Canalaska - West McArthur
Location: Canada, Saskatchewan, Athabasca Basin
Stage: 3-Discovery Delineation (Uranium)
Project OV posted: May 17, 2016, Current OV: May 17, 2016
OV Project: Eskay Mining - Corey as Eskay Creek II
Location: Canada, British Columbia, Golden Triangle
Stage: 2-Target Drilling (Gold Silver Copper Lead Zinc)
Project OV posted: Apr 25, 2017, Current OV: Apr 25, 2017
OV Project: Eskay Mining - SIB-Lulu as Eskay Creek II
Location: Canada, British Columbia, Golden Triangle
Stage: 2-Target Drilling (Gold Silver Copper Lead Zinc)
Project OV posted: Apr 6, 2017, Current OV: Apr 6, 2017
OV Project: Highway 50 - Monroe
Location: Canada, British Columbia, Southeast BC
Stage: 2-Target Drilling (Zinc Lead Silver)
Project OV posted: Apr 11, 2017, Current OV: Apr 11, 2017
OV Project: Peregrine - Chidliak CH6-7
Location: Canada, Nunavut, Baffin Island
Stage: 6-Prefeasibility (Diamond)
Project OV posted: Oct 28, 2015, Current OV: May 20, 2016
OV Project: Sirios - Cheechoo
Location: Canada, Quebec, James Bay
Stage: 3-Discovery Delineation (Gold)
Project OV posted: Apr 21, 2016, Current OV: Apr 29, 2016
OV Project: Uravan - Outer Ring
Location: Canada, Saskatchewan
Stage: 2-Target Drilling (Uranium)
Project OV posted: Jun 27, 2016, Current OV: Jun 27, 2016

United States
OV Project: Arizona Mining - Hermosa-Taylor
Location: United States, Arizona
Stage: 7-Permitting & Feasibility (Zinc Lead Silver Copper)
Project OV posted: Feb 29, 2016, Current OV: Jun 18, 2018
OV Project: Arizona Silver - Ramsey Open Pit Scenario
Location: United States, Arizona
Stage: 2-Target Drilling (Silver Lead Zinc)
Project OV posted: May 18, 2017, Current OV: May 18, 2017
OV Project: Nevada Expl - Awakening
Location: United States, Nevada, Humboldt County
Stage: 2-Target Drilling (Gold)
Project OV posted: Oct 21, 2015, Current OV: Oct 21, 2015
OV Project: Nevada Expl - Grass Valley
Location: United States, Nevada, Cortez Trend
Stage: 2-Target Drilling (Gold)
Project OV posted: Oct 4, 2015, Current OV: Apr 25, 2016
OV Project: Nevada Expl - Kelly Basin
Location: United States, Nevada, Battle Mountain Trend
Stage: 2-Target Drilling (Gold)
Project OV posted: Oct 23, 2015, Current OV: Jul 4, 2016

OV Project: Purdy's Reward Best Case Underground Scenario
Location: Australia, Western Australia, Western Australia
Stage: 3-Discovery Delineation (Gold)
Project OV posted: Oct 23, 2017, Current OV: Oct 23, 2017

OV Project: Peregrine - Sikwane
Location: Botswana
Stage: 2-Target Drilling (Diamond)
Project OV posted: May 25, 2016, Current OV: May 27, 2016
OV Project: Tsodilo - BK16
Location: Botswana
Stage: 5-PEA & Bulk Sampling (Diamond)
Project OV posted: Dec 13, 2016, Current OV: Dec 13, 2016

Copyright © 2018 Kaiser Research Online, All Rights Reserved