How do you calculate that something that is potentially open pittable with 3% Zn + 1% head grade is "waste"?
3% Zn alone is A$112/t gross revenue at spot prices. Granted you need to take off recoveries, payabilities, royalties, and concentrate treatment charges and other opex, but how do you come to the conclusion that that type of NSR is uneconomic?
My high level costings are shown in the table below. This looks economic to me. A key disclaimer is this is not financial advice. I may be completely wrong. No one should rely on this and you should do your own work.
Key drivers will be the strip ratio, how far down the mineralisation has oxidised, and metallurgical recoveries. If this is mostly coarse grained sphalerite (zinc sulphide) and galena (lead sulphide) then they shouldn't really have any metallurgical issues.
Have a look at the 21 October 2019 ASX release. It contains the basis of their geological interpretation of the mineralisation. They believe this is hosted within the sandstone strata. Have a look at how large the sandstone basins are. Granted they need to prove continuity of mineralisation with future infill drilling, but this looks like it could potentially be significantly larger than 30mt.
This is still a very early stage, effectively greenfield discovery and has all the relating risk associated with that. If their infill drill holes are dusters then the share price will react accordingly. But if you put in your own assumptions on potential tonnage, production rate, and multiply by potential margins I think you'll realise why some people are so excited about what this could potentially become. If they can vector into the source of the mineralisation and find a high-grade core of +7-8% Zn+Pb then its really game on here.
RTR Price at posting:
68.0¢ Sentiment: Buy Disclosure: Held
