Costwise though, once the decline is in to reach the depth of the deposit, then they still have the cost of drilling PLUS further costs to keep extending the decline in order to keep on drilling.
Strike length is reported at 16-18km's(?) and at well over 1km depth, they can't just dig the decline down to one spot, and stop, and then drill the rest of the deposit from that one point? The decline costs will keep escalating the further they need to keep drilling.
If they are still unsure whether the resource is economically viable I couldn't imagine them wasting 1-2 years putting in the decline just to enable them to start drilling again.
In that time, they could have completed all the surface drilling within the same timeframe and already have a result/reserve which would then secure them a solid JV? This way, any JV established would be on less favourable terms to KZL because the risk is still high until the drilling has proved up a reasonable reserve which is still years away.
My point is, if the decision to put in the decline goes ahead, it means they concluded that the deposit is viable, before they start the decline. Regardless of the money/costs, what a huge waste of time it would be otherwise - 1-2 years before they can even start drilling again.
Can you comment on the grade of the deposit from the previous drilling results. I understand that the deposit, while large, is of a low grade. I'd appreciate your comment on that. Thanks
KZL Price at posting:
$1.26 Sentiment: Buy Disclosure: Held
