Golden Cross

Technicals - Golden Cross and Fundamentals

There is an apex of events happening over the next few business days for PGD.TO.

First and foremost is an imminent Golden Cross. This is when the 50 day moving average cross up over the 200 day moving average.

As you can see by this image, there is really nothing stopping this from occurring over the next couple of trading sessions:

A lot of opinions on whether technical events on a junior stock are even relevant. That is a question for another day.

The golden cross and most technical events like to have associated volume occurring during the event.

Beyond the golden cross, is there any other events that are happening that would generate volume in the stock?

The answer to that is a yes. There is a fundamental reason why the volume should increase. That is because of the expected CH-7 maiden inferred resource (tonnage and grades) that is expected early in May.

You have a fundamental event and a technical event possibly happening within days of each other. This should generate some excitement.

All this happening within 2 months of an expected PEA (preliminary economic assessment).

It might be very quiet on site at Chidliak, however, there should a lot of activity happening in the Vancouver office of Peregrine Diamonds (owner of Chidliak).

A billion dollar mine

Building a billion $$ mine?

Hmmmm. Quite an interesting task and very tough for a junior.

What if instead of a billion $ mine, one builds a mine that generates a billion $$'s each and every year?

Start with the highest value material and mine enough tonnage to generate a billion dollars.

CH-6 kimberlite at Chidliak is grading 2.45 carats per tonne.
The initial valuation had a high value of US$236 per carat and at the time, it was indicated that the high value might be considered conservative.

Taking that value and converting it into Canadian dollars, you get (0.785 conversion) CAD$300 per carat valuation. For each tonne, you get a value of CAD$735.

How many tonnes do you need to mill in a year to get a crisp CAD$1 billion? The answer is 1.36 million tonnes.

The concept of Chidliak has been swaying between 500k tonnes per year and 1 million tonnes. To achieve a potential of CAD$1 billion in revenue, a 1.4 mtpa mill would be needed. That is still a reasonable sized mill.

How long can you sustain this?

Between surface and 260 metres below (including a 10 metre overburden), you have 4.6 million tonnes.

4.6 million tonnes / 1.4 mtpa = 3.3 years of generating CAD$1 billion a  year.

Not a very long time..but big numbers.

Now you look deeper then 260 metres. From 260 to 510..assuming the steeply dipping pipes stay steeply dipping and the grade and valuation stay the same, you end up with another 4.6 million tonnes. That gives you another 3.3 years. Going from 510 to 760, another 3.3 years.

So, when you combine a pit/underground scenario all the way to 760 metres (similar to Renard), the total numbers of years at CAD$1 billion is 3.3 x 3 = 9.9 years or approximately 10 years.

That doesn't include any CH-7 material.

By the time Chidliak goes through all the economic studies and heads to construction, a mill at 1.5 to 2 mtpa blending a mixture of CH-6 and CH-7 could easily generate CAD$1 billion in revenue over a 10 to 12 year period.

The upcoming PEA will be using a limited pit with both CH-6 and CH-7 to generate a reasonable mine plan. The resource under 260 metres at CH-6 will probably be expanded to a bit deeper depth for a little of explorations dollars...but going down to 760 metres is probably a programme for much later.