Overtures i'd agree with that on limited knowledge of course but it makes sense that nobody would enter into a contact to pay spot price over the long term...unless i'm guessing demand was there to ensure that.
Its great to assume a lot of these things, but I think we probably need to look at the Intersuisse report as the best guide for now. They are not talking spot price as we all know. They are talking $80 odd dollars.
They have also given a valuation on that spot price and assumed lower grades.
Therefore in very simple terms the $2.82 valuation is conservative.
Of course its not that simple.
PLV will need to ensure they produce the tonnages discussed in the report to maintain the valuations given.
We should not overlook PLV's comparative advantages and end users not wanting to be in a position to be stuck in busy ports/railways/sharing infrastructure.
PLV may well command a premium relative to 'other' IO producers based on factors such as this.
Would be considerably less headaches and 'issues' related to those infrastructure issues perhaps?
I think we should also remind ourselves that Intersuisse are analysing the company on 'current resource estimates'
Yes Irvine will get bigger.
Intersuisse have taken into consideration 150MT at 66%.
What happens to the valuation/assumptions when...and I say 'when' Irvine proves up 200MT at 66%?
...and the Isthmus reveals more DSO than originally thought?
These are all positive factors that will create more value for the operation and obviously the valuation.
The numbers we have and are discussing are not the final numbers.
Valuations will increase. DSO will increase.
Spot price considerations? Lets wait till the current negotiations with end users is complete and announced to the market.
PLV have played hard ball with irvine as evidenced by Tonys passionate postings here telling us all deals could have been done ages ago.
Spot price? I personally am not too concerned with that.
The $140T spot may well be $90T in 2014.
Intersuisse have conservatively calculated $37.50 production per tonne. They assumed (from memory) that PLV were being conservative around $37 T.
It may well be less than that.
Thing is it is ALREADY an economically robust operation. The end user interest confirms that....and..we are only half way through drilling folks...
Lets see where the valuation is as I say when there is 200MT at 66%.....maybe 250MT at 66%...or beyond and DSO that was multiples of what was thought..
With a shiploader and infrastructure on Cockatoo Isalnd to get it to market cheaply and effectively whilst PLV continue to develop the operation.
Rest assured the current PLV team would be well aware of what 'may' be there on Irvine re undiscovered resource and would be negotiating accordingly.
Make no mistake either that all parties concerned would have a good idea and a ballpark range on it.
Much more to come imo.
PLV Price at posting:
63.5¢ Sentiment: None Disclosure: Held
