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Solarbat

1,006 Posts.

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20/02/17

11:11

Post #: 22744019
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Originally posted by PamplonaTrader ↑

I did a comparison on the CNJ thread:

Mt. Thirsty is a good deposit. My assertion is that $CNJ/$BAR had "optimized" their process flow sheet in an effort to market Mt. Thirsty as an economic deposit during a depressed pricing environment. In this instance, the 2012 model is garbage in, garbage out.

Through the lens of a peon retail investor/speculator, the low CapEx and OpEx looks very attractive. The smoke-and-mirror study helps to lower their cost of capital, reduce dilution and raise funds to advance the deposit. But no suitor is going to look at Mt. Thirsty simply for cobalt exposure. That is not how they are wired. Any potential suitor is going to be motivated by cash flows. Discarding over 10ktpa of potential nickel production and over US$100m in annual revenues is incredibly stupid. If $CNJ/$BAR has genuine intentions of developing (and hopefully selling) Mt. Thirsty, they will need to revert to the atmospheric leach flowsheet to improve nickel extraction, thereby boosting LOM revenues.

Mt. Thirsty compares very well to $ARL's KNP... it's just much smaller. $CNJ/$BAR published a scoping study back in 2009. For an apples-to-apples comparison, I've rendered the table below:

A couple notes:

1. $ARL's KNP is likely to achieve comparable cobalt production to Mt. Thirsty early in it's mine life. The cobalt zone within Goongarrie South grades 0.12% cobalt, double the LOM leach feed grade of around 0.06% cobalt. The big difference, then, is the nickel production and mine life where KNP has a clear advantage.

2. $CNJ/$BAR is likely to implement Simulus' acid recovery process which should reduce net acid consumption to under 200kg/t. $ARL should also see net acid consumption fall to the 200-250kg/t range after optimizing Siberia limonite pulp density. These will have a significant impact on operating costs as acid consumption can be anywhere from 350kg/t to 1000kg/t process lateritic ore.

Finally, here are the current valuations. While $CNJ is not expensive, it is clear $ARL is being absurdly discounted:

Expand

Excellent modelling @PamplonaTrader, but I disagree with the initial assumption that you've based it all upon - that BAR/CNJ will not pursue the $65 Mil low capex 2012 plan to focus on cobalt. It is that part which makes Mt Thirsty unique and valuable.

Their plan:

Build a cheap mine to get the majority of the cobalt quickly. Sure good to have extra 100Mil/year in Nickel revenue, BUT that they have stated that the mine can be upgraded later to get the remaining Nickel, and obviously a 65 mil mine is a lot faster to plan, finance and build than and 400-500mil mine. The directors are very aware of the need to meet current cobalt demand quickly.

Unlike other Nickel laterite deposits, Thirsty is unique in its oxidised nature, and that a lot of its cobalt sits very near the surface with the Manganese . These things mean that they can get it very very quickly and cheaply. This is their competitive edge, and why Thirsty will be one of the first to mine. They'll start mining while other Nickel Laterites are still years away.

Solarbat

BAR Price at posting: 11.5¢ Sentiment: Buy Disclosure: Held
24 Upvote

0 Great analysis

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