CGM Chart 26/7/2011

Pyke Hill Project

poster: onshow from Hotcopper 

"In 2005 CGM sold the Toomey project to the Murrin Murrin JV for $6.5 million with an indicated resource core of 1.04 million tonnes at 1.4% nickel for a contained resource of about 14,560 tonnes of nickel, when nickel price was $US 12,500 tone now its around $US 23,000 tonne.

The Pyke Hill Project is located 40km southeast of the Murrin Murrin Nickel Operation in Western Australia. Cougar holds the nickel and cobalt laterite rights to the project, and in March 2008 published Measured plus Indicated Resources of 14.7 million tonnes grading 0.9%Ni and 0.06% Co for 131,621 tonnes of contained nickel metal (0.5% Ni cut-off).

So what's 131,621 tonnes of nickel worth???

131,621 x $23,0000 = $3,027,283,000

So in ground value of the project is worth just over $3 BILLION US dollars!!

So to help me value the current deposit i had to go back and look at what we sold the other nickel project for which was:
$6.5 million for 14,560 tonnes of Nickel.
So what was 14,560 tonnes of nickel worth back in 2005 when the nickel price was $12,500???

14,560 x $12,500 = $182,000,000 million

So the company that bought the Toomey nickel project was willing to buy the project for $6.5 million which had an in ground value at the time of $182 million

So $6.5 million divided by $182 million = .0357

So they paid 3.57% of the total in ground value for the project.

Using this we can work out roughly what Pyke hill will be worth if we were to sell it on now.

Pyke hill in ground value is roughly $3 Billion.

.0357 X 3,000,000,000 = $107,100,000 million

So the only logical way of valuing this assets if the company were to sell it which i think they are is to use the same method and calculations as was used with the sale back in 2005. Which is working out 3.57% of the in ground value, providing the it is as econimical to get out of the ground as the Toomey project."