Hello everyone,
Grenville Gold's (TSX-V, GVG) Silveria mining project unites for the first time four past-producing mines (silver, gold, copper-lead-zinc was produced): Pacococha, Millotingo, Silveria and Germania. By itself, the Pacococha district is huge: over 98 km's of underground workings! Synergistic pieces of information explain why I render a $2 Billion Potential Target for Silveria.
The company will likely mostly generate cash flow from two sources of ore at Silveria: one is from the interbedded porphyry deposit and the other, from the high grade ore veins.
Here's my reasoning:
n High Grade Ore
A. Conservative ore grading (conceptual target). B. 1991 Pacococha production grade. C. 1991 commercial ore reserves. D. 1991 Pacococha uncommercial ore grade. E. 2007 average sample ore grade.
Please note that the following resource prices were taken (15/12/2007): $793.10 /oz Au, $13.81 /oz Ag, $2.91 /lb Cu, $1.12 /lb Pb and $1.05 /lb Zn.
A. 4 oz Ag, 1% Cu, 2.5% Zn = $177.27/t
B. 3.61 oz Ag, 1.7% Cu, 0.76% Pb, 3.08% Zn = $248.98/t
C. 4.49 oz Ag, 1.75% Cu, 1.47% Pb, 4.13% Zn = $306.18/t
D. 2.58 oz Ag, 0.54% Cu, 1% Pb, 4.4% Zn = $196.82/t
E. 0.409 gr. Au, 212 gr. Ag, 0.693% Cu, 1.83% Pb, 5.43% Zn = $319.90/t
For Cash Flow I will use $200 per ton based on previous information and low production costs (US$45/t milled - 43-101).
Projected 4th quarter of 2008: Plans to extract 500 t/ day
500 tons/day * 300 days * $200/t = $30,000,000
Conservative P/E of 6 * $30,000,000 = $180,000,000 market cap
Conservative P/E of 8 * $30,000,000 = $240,000,000 market cap
Potential tonnage (previous daily production)
2500 tons/day * 300 days* $200/t = $150,000,000
Conservative P/E of 6 * $150,000,000 = $900,000,000 market cap
Conservative P/E of 8 * $150,000,000 = $1,200,000,000 market cap
n Approximately 44 Years of Production…
Grenville Gold has a conceptual resource target of 10-25 M tons; this is conservative. On their property there are 24 major veins. This tonnage is based on the extension of the 14 previously mined veins. If you hypothesize the same grade and quantity of ore within 4 of the other 10 major veins = 25 M x (24/18) = 33.3 M tons.
33.3 M tons ÷ (2500 tons/day * 300 days) = 44 year mine life.
n Building for the Future
"One of the points which Chairman De Melt took great pains to explain was that his goal was to build a project which he intended to last for decades and he fully believed that his children and grandchildren would be taking part in the project for years to come. The objective, therefore, was to discover and define ore bodies on their vast properties which could sustain production long into the future."
The Melman Report - Leonard Melman - July 2007
n Rewarding Possibilities
"[…] previous production at the mines returned high grades, however, Gill stresses that future production could return even higher grades." The further you go down the system, the better chance you have of finding mantos, finding porphyry or finding further types of disseminated deposits that will have high-grade ore, high-grade mineralization, and high amounts of tonnage." With these possibilities in mind, it'll be rewarding to watch as the story unfolds, and we find out what's really in the ground at Silveria."
Grenville Gold Corp. Works all Angles at Silveria - Katherine Young - Oct 26th 2007
n Open Pit Dream
Len de Melt: "I'm excited about it in two ways. Number one, putting it back into production where it was previously being mined at 2500 tonnes a day. Of course more excited […] by the possibility for another Toromocho type project […] Some people have mentioned as much or possibly as high as 2 million oz of gold just in the tailings […] Our dream is to turn this into a huge open pit mine […] We're doing a huge exploration program and we hope to turn this whole area into one huge open pit."
The Smartstox Talk Show - Stanley Hunt - July 24th, 2007
n Major Interest
Three Majors are keeping an eye on Grenville Gold's progress: they include Glencore, Solway, Hochschild (and there may be more…).
n Another Toromocho?
"Grenville's investigations show the veins are epithermal in nature resulting from past volcanism. In these systems, precious metals tend to accumulate near the top, while a richer concentration of base metals is found nearer the bottom. Grenville believes the Millotingo mine with its high silver and gold concentration represents the top of such a system, while the other mines with their higher base metal content, would be from lower in that enriched zone. underlying the epithermal veins could be a large porphyry body, and that's what Mr. De Melt would love to prove. The geography and geology of Silveria is similar to that at the Toromocho project just 40 km away. At Toromocho, Peru Copper defined a large open-pittable polymetallic porphyry deposit that is a model for what Silveria may turn out to be. Peru Copper recently sold Toromocho for $850 million."
The Smartstox Talk Show - Stanley Hunt - August 17th, 2007
n High Grade Facts by President
Paul Gill: "[…]the location, the past production, the fact that we've found information on what they've mapped for the next 15 years and not all of it has been exploited, the fact that we've got fantastic silver, high grade silver results already and what they know from the past mining, they've had high grade results come out of the ground. We love the potential of this particular project."
The Smartstox Talk Show - Stanley Hunt - July 24th, 2007
n It All Ties Together!
Grenville Gold's Management are very large shareholders of the company, currently:
- Chairman Len de Melt owns 3,970,613 shares, 538,887 options and 240,000 warrants ($1,538,301.49 spent on common shares at an average cost of $0.387/share).
- President and CEO Paul Gill owns 1,680,500 shares and 375,000 options ($906,485 spent on common shares at an average cost of $0.539/share).
Combined they spent $2,444,786.40 for 5,651,113 shares (at an average cost of $0.433/share)!
On a fully diluted basis Paul Gill and Len de Melt own 6,805,000 shares or 17.4% of the company (39,176,642 shares).
Top 10 filings
Rank Filing Date Value Insider
1 18/09/2006 $274,259.00 Chairman - Len de Melt
2 18/06/2007 $202,555.99 Chairman - Len de Melt
3 28/06/2007 $173,525.00 Chairman - Len de Melt
4 20/06/2007 $171,050.00 Chairman - Len de Melt
5 18/09/2007 $151,645.00 Chairman - Len de Melt
6 16/07/2007 $124,815.00 President - Paul Gill
7 07/06/2007 $122,650.00 Chairman - Len de Melt
8 02/01/2007 $100,000.00 President - Paul Gill
9 21/08/2007 $84,630.00 President - Paul Gill
10 18/04/2007 $76,263.50 Chairman - Len de Melt
n $2 Billion Potential Target
$1,200,000,000 market cap + Another Toromocho? ($850 M) = $2 B
n JNY-V and GVG-V
JOURNEY ENTERS INTO LETTER OF INTENT WITH GRENVILLE GOLD TO ACQUIRE INTEREST AND FORM JOINT VENTURE ON SILVERIA PROJECT
See December 13th 2007 news release for summary details
Disclosure, do your diligence
I_Luv_GVG
