So as of today, we the investors of St. Elias Mines, know we are sitting on a reserve of gold at Tesoro. There has been a huge amount of pontificating on these pages as to the scope of the reserve and extrapolated from that, the share price we will see when (if) Tesoro gets sold.

There have been numerous math calculations done and debated. It's fun to do and as BOW2U points out, at some time, one has to come up with a $$ figure of the value of his/her shares in order to determine if an offer is fair or not. I think that BOW2U's math model is reasonably accurate for the above stated purpose.

Still we have several variables that need to be determined so that the numbers that get plugged into to formula are realistic. Obviously that is why SLI is furthering the exploration of the Tesoro, to determine and narrow those variables. Trenching, drilling, perhaps more of that and other work in the future.

The way I see it, there are three variables that must be narrowed before any realistic determination of the value of Tesoro can be made. Those are:

1. The volume of economically mineable ore. - The correlation between the Quantec surveys and known gold deposits is very strong. This has been well argued by Primed24 and others. As Rinky says, "It quacks." And I doubt Murry when he offers up salt water as being the cause of the change in resistivity. A strong correlation between gold mineralization and the strong blooms in the Quantec survey has been established. Yet still to be determined is the volume of ore that is present. The anomalies are probably not a homogenous lump of mineralized rock. There will be variances throughout the cores. The initial drill program will likely be enough to prove that the correlation between the Quantec information and gold mineralization goes to depth. To determine mineable volume will most likely require infill drilling. Add to that another variable, the overburden. Yes, trenching may establish that the overburden in the vein corridor is economically mineable. But picture this. Say an entire anomaly is to be mined out using open pit method. The anomaly will lay in the bottom centre of a huge funnel. A lot of material on the big outside rim of that funnel will be just rock that costs money to remove. Mineable ore volume will take much work to truly establish.
2. Mean ore grade. - That is pretty self explanatory. Again, early core drilling and trenching will tell us grades in the anomalies and immediate surroundings. Infill drilling will determine where the grades peter out to uneconomical values.
3. Value assigned to gold in the ground. - This variable depends largely on the previous two plus others like political risk. How much gold there is will be a determining factor in how much is paid for it. Say it costs $1 billion in capital costs to build the facilities for a mine and then $600/oz to produce gold. Factor in interest and royalties, and the first 3 million oz of gold are worth exactly $0. The first ounce is the most expensive one to produce After that, a mine can turn a profit and do so for a period of time until the ore grades drop off to an uneconomical point. Before that, a reserve for reclamation needs to be funded. So if the amount of gold at Tesoro will keep a mine economically productive for multiple decades, then the price per oz we will receive will be much higher than if there is only a 12 year lifespan for the mine.

The trenching and initial drilling will give us a firm indication whether or not this project will become a small, medium or large mine. For the ladder two, it will require an infill drill program and a mine feasibility study. Whether SLI does it or someone else is still open. From my experience, a feasibility study and the groundwork it requires is a couple, three year operation. If Tesoro looks like a big mine, we may get scooped up early, but at a discount for the unknown variables listed above. I guess it will all depend on how rich an offer that comes our way is.

We know already we have a small mine property. Few other plays have as much potential as Tesoro to be a huge mine. I think that by AGM time we will be seeing which way we are headed. Then there will be a decision that needs to be made. Take a potential early offer and leave some $$ on the table or invest more to narrow the above variables and establish a fair price. Both options carry risk, and hopefully for us, reward.

Cheers