In defence of POS management

POS stock price has been under significant pressure probably as result of unfounded rumors related to failure of second $15M tranche of funding. SP took a significant hit over last 7 days dropping from $0.175 to $0.12 and volume accelerated into the close yesterday afternoon with over 8 million shares dumped into the market (poor lemmings).

The 3B that came out last evening effectively killed the false rumors (although the funding was about $1M short of its oversubscribed goal).

IMHO there must be some pretty influential folks in the mining and brokerage community who must be quite piqued by the fact that POS snatched up $250M of Norilsk nickel assets for the price of a small cottage in Double Bay AND then pulled in a heavily oversubscribed placement of $30M at $0.18 per share.

The naysayers may be able to stampede ignorant shareholders into dumping their stock at a very significant discount, but here are the facts.

We are about 12 weeks away from the commencement of mining at Mount Windarra from the near surface G Shoot which is located about 25-50 metres from developed mine workings. POS commenced a 1,300 metre underground drill program to bring this resource into a mineable category (probably a mix of 50 - 100 -150 metre holes commenced two weeks ago). They probably already have the XRF data from most of these holes and are awaiting formal assay reporting. The Lower G Shoot has an Inferred JORC Resource of 1.06MT at 1.46% Ni for 15,500 tonnes of Ni and abuts the H Shoot with 28,000 tonnes at 1.87% Ni for 500 tonnes of Ni.

At an advance rate of 5 metres per day the mining contractors will take 5-10 days to access the G Shoot which has a horizontal extension of around 125 metres. Mining cost at Windarra is put at $70 tonne (last PPP) with total CAPEX to bring in the deeper shoots (below 450 metres) at $11M. The cost to bring the G shoot into production will be nominal as it very shallow and next to established and fully developed mine workings, and can be in production by end of February.

POS has also stated that they can reduce CAPEX even further by brining in underground plant infrastructure from Lake Johnson and Black Swan to assist with reduction of initial mining efforts. My guess is that first ore can be extracted on an ongoing basis from the G Shoot at a small fraction of the total $11M assigned to the deeper underground shoots that will take some additional months to develop and mine. This provides POS with a very cheap and near term ore source of over 1MT at 1.46%.

There are some approvals that are required but these appear to be very procedural at this stage and are imminent.

Additional bull points ignored by the naysayers include the collapse in the A$, rise in the spot price of nickel to around A$9.20 pound currently, and IMHO set to rise significantly over the coming several months.

We also have a JORC resource statement and Feasibility Study coming on Lake Johnson, drilling results from the G Shoot at Windarra, surface drilling on the G shoot in January.

This is only part of the upcoming newsflow that will include newtech magnetic targeting of current and new nickel targets across the portfolio. Most companies are lucky to generate several targets whereas we are in mostly brownfield locations that will generate dozens of near surface and deeper targets.

I posted on an earlier thread that the current magnetics at Lake Jonson over existing mineralisation only picked off a small fraction of the tops or tips of the near surface mineralisation. IMHO we are about 5% of the way into the full development of the POS tenements and mineralisation (over a decade to develop) AND we already hold about 400,000 tonnes of nickel.

Do not get suckered by the naysayers, our fundamentals are excellent and we have a top notch management team that has acquired assets with very, very significant long term potential.