But, returning to the SYR-TON debate (and it is clearly not going away!), we have to recognise that there will be ongoing competition, and we should therefore try to be as well-informed as possible on where the respective companies are going.
A line in the Credit Suisse report made me look again, more closely, at the TON JORC Resource announcement. (OK, OK, some people read detective stories in bed - I like solving puzzles, and this is a fascinating one!). And there do appear to be a couple of important questions which remain to be answered.
The biggie is this. On Page 2, the announcement says that TON is:
"Using a block model reporting cut off grade of zero, which incorporates all internal dilution within the modeled mineralized domains"
Gobbeldy-gook to most investors? First time through, I thought it meant the whole deposit was being averaged, to get the figure of 10.7% graphite, and I think that most investors would also read it that way.
Now, I'm not at all sure. The key words are:
"within the modeled mineralized domains"
Remember how the drill hole reports left out large slabs between the reported intersections, (the thickest of which is the Mutola zone, at only 30 m)? And how the reports quoted, for each hole, total metres of graphite intersected (i.e., the total of all the graphitic bands), but didn't mention metres of barren rock or low-grade ore? Was anything other than the rich bands included in the "modeled domains"?
If those bands are the "modeled mineralized domains" (and that is looking likely to be the case), then there is a very serious problem with their ore reserve calculation. Quite simply, with a stack of thin bands, and a lot of barren rock between them, running an economic mine will be next to impossible. Nobody can dig a pit which will selectively mine narrow bands of graphite (unless, of course, they just scratch the surface, and leave most of it behind). Having lots of graphite is great - but only if you can mine it economically. It's absolutely critical that the company should not have to dig up twenty or thirty tonnes of rock to get one tonne of graphite.
Let me emphasise that this is just the way the announcement reads. Maybe it means something else. For the sake of TON shareholders, (I was one for a while) I hope so.
If so, TON should clear the air for investors by telling everybody how much graphite (if any) lies between the bands they have announced. The key questions are these:
Did the modelling include ALL the rock intersected by the drill holes? Or did it include only the rich zones in the calculations of ore reserves? Does the 10.7% graphite quoted come only from averaging the richer bands, while leaving out intermediate rock?
How much of the Nicanda Hill deposit can be economically mined? Does the orebody require selective mining of thin graphite bands? Does the rock between the graphite bands contain enough graphite to be worth mining?
The second (and less important) area triggered off by this bedside table reading is that of mining the Mutola zone. Everything at the SYR Balama deposit, and most of Nicanda Hill, looks to be soft easy-to-dig material, straight from front-end loader to ore truck. But the Mutola zone is
"graphite-enriched quartz and carbonate" (TON report, P6)
This sounds very different to soft graphitic schist. Will it need special mining equipment or techniques? I don't know, but shareholders are reasonably entitled to ask.
It's not unlikely that people with more current geological background than my own are going to be asking these, and similar questions, in coming days. I trust that TON, or posters on HC, can help.
Cheers, Prime1
SYR Price at posting:
$3.59 Sentiment: Buy Disclosure: Held
(20min delay)