@readyaimfire... I think malvermoe's reference to leaks was the outrageous run up from 30c to over 70c mid-Mar to mid-Apr while ESS was sitting on a confidential, non-binding takeover offer and no other releases were responsible. Not to accuse the board of spreading the tip widely beyond family and close friends of course, just that where money is involved greed and self-interest trumps confidentiality. IMHO, the ASX needs to change it's rules regard the multitude of excuses not to inform the market of obviously material information so those with inside knowledge (however they got it) can't take advantage of those without it...
Meanwhile, it seems the market didn't see the 'no change' MRE coming or price it in anyway. I call BS. Can't believe the volume of sellers since MRE dropped is driven by muppets that couldn't join the dots on drilling results to no MRE expansion, or even just listen to the last company presso where Tim explicitly said the MRE woudn't get any bigger. The MRE release was woefully short on detail and images like long-sections and no grade cut-off v tonnage curve etc. It always looks like a company has something to hide when they release 'small target' summaries and lead off with BS like “The work undertaken this year to improve the quality and confidence of the Dome North lithium Mineral Resource has paid off..." when the drilling undertaken this year was demonstrably to "expand the resource" as stated in numerous releases.
Just once I'd a company to call a spade a spade. maybe like "although it was disappointing the resource was not increased in size, the improved confidence level in a still substantial resource from surface...". Who am I kidding, ASX releases are a hybrid between sales pitch and political spin that usually look like an episode from Yes Minister. I guess the board deliver shareholders what they want, always positive spin to try and support the share price, and so get what they deserve.
For mine, listening to Tim's last presso gave a much clearer picture of what the board is thinking than reading spun releases trying to please everyone. Like the DSO issue. In the presso Tim says DSO doesn;t make sense not going there. Shortly afterwards in this MRE release DSO he says "We will of course be considering all development options including fast-tracking Direct Shipped Ore (DSO) cargoes as a means to bring forward cashflow." So what gives?
Well, the maths for DSO from Higginsville vs capex to float off a 5.5% Li2O con simply doesn;t stack up over LOM. Each tonne of DSO at 1.3% Li2O converts to 0.91% Li2O into spod-con @ 72.5% float recovery. The DSO off-taker has to receive 6t of DSo ore for every 1t of 5.5% spod-con they generate after recovery losses. An extra 5t of waste transported 200km to Esperance, through the port and into Asia at around US$20/t shipping. Even at cheap rail rates, the double handling compared to trucking and port storage/fees mean each tonne of watse might cost ~US$40/t landed in Asia. So 5t of waste @US$40/t = US$200/t extra cost...
If Dome North mines ~1.2Mtpa ore at 1.2% Li2O to produce ~200ktpa 5.5% Spod-con, that's an extra 1Mtpa waste shipped annually (ie that 5:1 extra waste ratio). 1Mt x US40/t = US$40M extra cost annually to DSO rather than build a plant and float off a 5.5% Li2O con... Over 7 year mine liufe that's US$280M lost to DSO transport cost slippage, vs building a float plant tailings etc for ~A$100M (US$70M @ 70c FX). The NPV of US$280M over 9 years LOM incl mine build is about half, or $U140M vs US$70M to build the float plant. The opex saved in DSO vs flaoting a con is lost in the processing discount demanded by off-takers... long term it just doesn;t make sense, which is what Tim has been saying.
On the other hand, free dig some undiluted higher grade DSO over the 18 months plant build and for early cashflow could help over-all project economics and funding. Especially if the lithium price holds up over that first 18 months above LOM base case price assumptions. What you lose in DSO vs spod-con transport costs are made up for with higher prices. It's absolutely worth considering and explains why Tim can be both anti-DSO mine plan but pro-DSO development options at the same time...
Lot's going on behind the scenes we are not privy to I'm sure. The slow rate of deposit drilling and study slippage looks poor but there may be explanations other than lifestylers struggling to get things done in a timely fashion. I'm willing to give management benefit of the doubt. This looks a very simple mine proposition so the PFS, DFS could follow SS very quickly if they really wanted to. Do they really want to is the relevant question imo...
GLTAH
