An in-house after-tax cash flow assessment by Fleck Resources (VSE) on the company’s Dunka Road deposit in Minnesota estimates a return of 15.9% on invested capital. The Dunka Road deposit was acquired in January, 1989, from USX (NYSE) in return for advanced royalty payments escalating from US$10,000 in the first year to US$75,000 in the 10th year as well as net smelter royalties ranging from 3% to 5% depending on the smelter return. At the time of the acquisition, spot nickel prices were about US$8.50 per lb. while copper prices were about US$1.60 per lb.
Since acquiring the property Fleck has examined information gathered by USX including 110 diamond drill holes. The company estimates that the deposit contains possible reserves of 190 million tons grading 0.43% copper and 0.096% nickel plus values of gold, palladium, platinum, and silver.
An engineering report commissioned by the company recommends a work program including further metallurgical testing, geostatistical studies to determine drill spacing requirements, and a small amount of drilling to test the geostatistics. The total cost is estimated at $250,000.
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