Ann: Lewis Ponds met testwork produces high grade concentrates, page-22

The report gives enough info in order to make a rough estimate of the value of the ore body (we need to wait for the company's accurate estmate, so don't hold me to the following). Firstly, ARL has reported previously on its work and its conclusion to change the strategy for Lewis Ponds to an open-pit mining (i.e., bulk tonnage) method rather than an underground mining method. The average grade will a bit lower, but the operation will be cheaper and the life of the mine should be longer and/or have a greater annual throughput of ore.

Secondly, to answer Fred's question, the amounts of composite ore samples processed for the report was not clearly stated, but it was lab-bench scale. On page 6 it says:
"The next phase of DMS test work will use a larger composite sample with the separation made in a pilot scale dense medial cyclone (as would be used in a full-scale plant design) instead of the small-scale bench sink-float Heavy Liquid Separation (HLS) test work used in this initial program."

Thirdly, with regards the size of the resource and its value, the report states on page 7:
"Previously, Lewis Ponds has been explored as a high-grade underground deposit, with a historic resource of 6.6Mt at 1.5g/t Au, 69g/t Ag and 2.4% Zn estimated (refer Prospectus Table 3.2 for full description of resource status). This resource is presently being re-estimated for a bulk tonnage mining operation."

Then on page 8 it says that when all the metals are considered, it is an orbody with Au-equivalent of 1.8 g/ton, which is a higher grade than that of other mines in the area (compare last column in Table 2). But it also concludes that by developing the operation as an bulk tonnage open-pit mine (instead of an underground mine), the resource needs to be updated:
"These results justify Ardea’s updated Exploration Target for the Lewis Ponds deposit, estimated at 15–25 Mt at 2.2–3.7 % ZnEq or 1.2–2.0 g/t AuEq (Heron Resources announcement, “Ardea Project Update” dated 6 January 2017)."

To make a rough estimate of the inground value, let's say we take a guess at the minimum size of the orebody of 10 Mt and multiply by the grade of 1.8g/t Au-equivalent (usng gold at US$1,200/oz = US$40/g). This calculation gives a rough value of: 18Mg Au x US$40/g = US$720 million (minimum inground value). Next, guess that the Capex costs maybe US$100 million (max), and the C1 Operating costs are unknown but they will determine the profitability. So, their next stage of testing with the large composite sample should give a good guide to the Capex costs and C1 costs. Also the resource upgrade should give a bigger resource and longer life of mine. Because it needs only a simple off-the shelf process, it will mean high confidence in their calculations. I like the post which says that is they are true to form, ARL may be giving us 1 for 10 shares plus options, which would be beaut. Good luck amigos.