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KMW Blog Oct 24, 2017: Allan Barry Laboucan and John Kaiser talk about Visualizing Aussie Wits 2.0 Outcomes


Posted: Oct 24, 2017JK: Allan Barry Laboucan and John Kaiser talk about Visualizing Aussie Wits 2.0 Outcomes
Published: Oct 24, 2017ABR: Allan Barry Laboucan and John Kaiser talk about Visualizing Aussie Wits 2.0 Outcomes

Direct YouTube link.

Allan Barry Laboucan and John Kaiser have a plan every couple weeks to go exploring on the Pilbara in search of Wits 2.0 candidates using a sceen share system. We will launch from the Pilbara Wits 2.0 Resource Center. Each episode is supposed to be no longer than 30 minutes but this one is an hour because neither of us yet fully understands the technology. So we beg the audience in advance for forgiveness and patience as we fumble around learning on the fly. The main theme is to explain my Outcome Visualization system as applied to the Purdy's Reward project of Artemis and Novo. The unrestricted version of the "Purdy's Reward Best Case Underground Scenario" displays the outcome without the detailed assumptions and explanatory notes, which are available in the members only version.

What John has done is imagine what that triangular piece of the Wits 2.0 pie that is the current exploration focus might look like as a deposit and what it might worth as a mine. The wild card is the grade. If the cost and tonnage assumptions are valid, Purdy's Reward on a 100% basis would have a negative value at 2 g/t gold, a USD $1.5 billion value at 5 g/t, and USD $4 billion value at 10 g/t gold in after-tax net present value terms using a 14.5% discount rate and $1,275 per oz gold price. At 30 g/t the NPV soars to USD $15 billion. The insanity of that last figure is intended to cool market expectations that the conglomerate bed at Purdy's Reward will average something like the grade obtained in early August from a single pinprick represented by a 542.3 kg mini bulk sample. What these numbers translate to in stock price terms depends on what net interest and fully diluted capitalization Artemis has when a bankable feasibility study supporting the OV assumptions is in hand. The arithmetic is done with the current figures, but one needs to keep in mind the dilution to fund the removal of uncertainty.

Even more important to understand is that the fair price worth paying today for that future outcome must account for the uncertainty of it being delivered. When John did an OV for the Ramsey Hypothesis of Arizona Silver Exploration Inc the end of the exploration cycle price target was $18 per share if Arizona SIlver's fully diluted did not change and it retained 100%. In the frenzy of anticipation some pumpers were pushing the claim that Kaiser believed Arizona Silver was an $18 bill. What he was really saying was that at the target drilling stage a fair value range a rational gambler should be willing to pay for a future prize with a CAD $630 million size was $0.19-$0.48. The market, however, when it gets excited starts behaving in an irrational manner captured in what we call the "market cycle S curve". At the target testing stage that range would have been a $0.48-$0.95 stock price range within which John did issue a Good Relative Spec Value Buy recommendation. When the drill results came back completely blank, the Ramsey Hypothesis was dead and the project did not advance to discovery delineation where the S Curve accelerates. Instead it was back to the grassroots target generation stage, from which it has recovered with new drill targets whose testing is now underway with considerably less fanfare. (See SVH TRacker - Sept 12, 2017).

The Cambridge Presentation on May 29, 2017, given the day before the bad news was released, explains the concept of outcome visualization and the rational speculation model. In the case of Purdy's Reward the project is already at the discovery delineation stage and vulnerable to the S Curve market dynamic. The Outcome Visualizations available through KRO are done exclusively by John Kaiser, but at the Share Collective they can be done privately by all the members and shared with the world if the member so chooses. The KRO OV is similar to John's TSC OV for Artemis' Purdy's Reward project. If you have not been registered as a beta tester you can only see ten clicks at this stage, of which the most useful one will be the "full calculation" for an OV which gives you all the assumptions. The point of the Share Collective is to empower everybody with the ability to construct a "back of the napkin" deposit and mining scenario based on how they interpret available evidence and where they think it will end up with additional exploration work. It can be kept private to guide one's own speculation strategy, or shared with everybody else. TSC hopes to go commercial as a subscription based service by the end of 2017, subject to additional funding. This makes it different from public forums like Hot Copper and Stockhouse. Direct YouTube link.

 
 

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