Ann: WAF hits 6.5m at 61.8 g/t gold at M1S, page-38

Well said JID and nordesmic, some rational opinions amongst the naive whining from certain posters. I have wondered how Afterpay, an unscrupulous payday lender for those that can't wait for pay-day, has become so popular. Then I read the HC WAF thread and understand, so many people want it and want it now; cash-flow, budgets or common sense be damned!

The biggest driver of share holder value right now is to bring the mine on-line, on schedule and on budget. That will bring in an enormous amount of free cash flow and a share price re-rating as the institutional investors (the buyers that will drive the price north, not the retail squibs who are already in and looking for a better price to get out) wade in once WAF is de-risked and suitable for their investment fund mandates. Running out of money early and going back to the market for another CR is not smart. Drilling dozens of 700m diamond holes from surface is expensive, takes a lot of time to reach resource/reserve density and is not smart.

Rather than continue an explanation rant, let me ask our resident whingers about the inherent contradiction in the proposition that value of M1 Sth deeps under the current reserve will not be recognised until it is drilled out. As things currently stand:

• TANT18 hit 25m @ 15g/t 220m below the reserve base and approx 150m below the resource base.
• Management think that the lode, which has proved very consistent to date, will join up to TANT18
• Geologists, myself included, understand as a rule of thumb shear hosted gold lodes have very good vertical continuity
• The share holders, without exception, believe that the M1 Sth lode will continue into and beyond TANT18
• The whingers who want it all drilled now obviously believe the M1 Sth lode is there or else they wouldn't be agitating to drill it would they now. If there was a reasonable risk that drilling actually showed it was skinnier, lower grade or faulted around then it would be insane for expensive drilling now to risk changing everyone's current belief that it is still there in all it's high grade glory!

So riddle me this:

If everyone thinks that drill hole TANT18 proves that the well behaved M1 Sth lode, already drilled to resource category 500m below the surface, extends another 150m and much deeper still, why will the market, any takeover suitor or shareholders not apportion value to this lode's extension?

Of course they will, not many of said investment participants are stupid. The valuation difference between being 'confident' the lode keeps extending to and beyond TANT18 and 'very confident' it little and certainly not worth wasting a lot of money on. Smart investors always look forward and apply or discount value based on the probabilities of an uncertain future. Even a JORC resource carries a certain amount of uncertainty, it's only the interpretation of geologist's confidence that a few point samples (drill holes) accurately reflect what happens to the thickness and grade between.

As the saying goes, 'price is what you pay and value is what you get'. A company can keep adding value but incrementally small value is usually lost in the large picture of the market macros and mood, volume of sellers vs buyers, manipulators, profit takers etc. The best management can do is tick all the boxes in order of importance within the time and money budgeted. WAF is already woefully undervalued and unfortunately in the short term there is really nothing management can do about it.