PDM is a uranium explorer and soon to be tungsten producer and is going to hit new highs. The U assays are imminent.
Assuming 500,000t we are looking at a mine payback of 10 months, with a op cash flow of $23.7m. The value measure per share would be then 21.6 with a PCF multiple of 0.7 with a commodity price of US$220/mtu.
At 1m tonnes this could be massive for the the share price. Good luck all. Hoping the U assays will pri_ck up a few more ears.
Realy like her
Prospective Tungsten Producers
“Re-emergence of a Specialty Metals Sector"
Speciality Metals Require Special Attention:
• We are seeing the revival of the mining sector progressing beyond the obvious bulk commodities such as iron oreand coal, and base metals such as copper, lead and zinc, to speciality metals that are used in the steel productionprocess.
• Many of these speciality metals have seen dramatic increases in their prices. The small volumes in which theytrade, often at spot prices and volumes only, has worked in favour of producers with Chinese buyers willing topay record prices.
• Specialty metals include antimony, cobalt, molybdenum, tungsten and vanadium, amongst others. Each has itsown supply issues and their availability is often dependent on their co-products. For example the porphyrycopper deposits can supply cobalt and molybdenum as by-products. Antimony is often found with gold.Vanadium is frequently found with uranium.
• Care must be taken to look at the primary economic metal in a style of deposit and assess whether the increase incopper, for example, is going to disproportionately boost world supply of molybdenum.
• We are cautious about vanadium as the supply will be boosted significantly as uranium projects come on streamover the next few years. Speciality vanadium projects will also come on-stream.
•Tungsten doesn’t see to face the same by-product issue of other speciality metals, thereby increasing confidenceas to the sustainability of the higher prices. However, tungsten projects may be affected by prices of a frequentco-product - molybdenum.Our Spreadsheet Provides a Comparative Analysis
• The attached spreadsheet gives investors a chance to compare tungsten companies listed on the ASX, along withone Canadian listed company. This spreadsheet is presented as a “work in progress” that we intend to update on acontinual basis, as and when information becomes available.
• None of the ASX listed companies are producing yet. The first cab off the rank will be Queensland Ores, whichwill commission in approximately six months. QOL has come along way over the 14 months we have beenmonitoring it. Most of the plant is on order and there has been a significant firming up of numbers and estimates,leading us to view QOL’s figures as the most reliable in the table. Yes, there are cheaper stocks on the forecasts,but we believe there is still a significant risk of sizeable cost increases with these – just as QOL has alreadydisclosed. We see QOL’s numbers as the Base Case. There is upside above these on expectations of reserveincreases from strike and depth extension, plant expansions and high grade pipes that have been excluded fromthe resource population. (Note that the QOL numbers do not include anything for the Mt Cannindah copper/goldproject, which is currently being assessed for development. This could be just as profitable as the Wolfram Campproject.).
• The next two producers, if schedules can be met, will be Thor Mining in March 2008, along with King IslandScheelite. Based on experiences elsewhere we expect that the timetables will slip at least three months in eachcase.
• The metallurgical and technical risks for all of these projects should be manageable given that they were allprevious producers that had closed due to low tungsten prices approximately 20 years ago. It is amazing what a400% increase in commodity prices will do to the bottom line!
• All of the projects have varying issues to overcome – some more than others. All numbers have been pre-projectfinancing. Some companies may use straight equity (QOL), others a combination of debt and equity (THR) andothers will use joint venture finance (KIS). Whatever the exact route, we should expect that there will be adilution level approaching 100% of current equity, for all projects. In most cases a debt financed mine will bevery difficult to achieve from conventional lenders due to the inability to lock in long term sales volumes at fixedprices. It also leads to banker interference in the running of an operation.
•A very interesting figure is the cash operating costs per MTU (metric tonne unit). A company such as QOL has aMTU cost of US$28 compared to a selling price of U$220/MTU. This is because of the significant molybdenumcredit. Thor Mining is in a similar, though not quite as impressive position of having an MTU cost ofUS$65/MTU, also due to molybdenum credits. King Island Scheelite and Vital Metals don’t have the benefit ofthe credit, so their unit costs are much higher. These are also higher capital cost projects with potentially longermine lives, on lower grades.
The dark horse in the pack is Paradigm Gold with a small resource in NSW. The Company believes that therecould be potential for 1 mill. tonnes of high grade ore, but that remains the objective of a drilling program. Wehave assumed only half this tonnage; that was all that was needed to come up with some very impressive back-of-the-envelope numbers. (Disclosure: FEC is underwriting the 1 for 4 entitlement issue, to raise $1.6m
GRAHAM Carman was yesterday out on the ground near Cloncurry sampling at one of his uranium prospects. His Paradigm Gold listed in 2003 as a pure yellow metal play but is now looking to unload those projects. The company has joined the uranium bandwagon and this has given its share price a nice little nudge. However, those projects are all very greenfields -- and blue sky. Never mind, the story is helping a $1.65 million rights issue launched this week. But Paradigm's tungsten is another story. The White Rock deposit near Boorowa in NSW is so far small (150,000 tonnes) but high-grade by tungsten standards (0.9 per cent). In gold terms, that's equivalent in value to 50,000oz. Carman believes he can get the tungsten up to 1 million tonnes. Tungsten, at 3410C, has the highest melting point of all non-alloyed metals and is used in a variety of lighting applications. It's one of those specialty metals that have come into vogue. Just witness the recent debut by NSW tungsten-tin play Wolf Minerals that ended its first trading day up 320 per cent on the 20c issue price.
Paradigm is well back in the queue on the local scene. Queensland Ores will be producing tungsten this year, King Island Scheelite has serious Chinese money bankrolling its project and both Thor Mining and Vital Metals have much bigger drilled up resources. But White Rock's location means it's close to infrastructure, keeping down capital costs and allowing a probable 10-month capital payback time once in production. http://www.theaustralian.news.com.au/story...5-18261,00.html
IOD Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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