My thoughts are fairly similar to
@Scarpa
"Agree, as a BOD with geologists on it they should know the required spacings to get resources in the appropriate bucket. The positive is movement to the Indicated bucket and the higher TGC grade. Yes the other positive is they seem to have a large resource that with a few drills they can move into the Inferred bucket of the MRE. Certainly have the resource to do a Scoping Study, noting Scoping Studies can use inferred resources, unlike a PFS/DFS where the resource base commences with Indicated/Measured."
I personally didn't expect a large MRE. Those who were referencing the exploration target and assuming we would get those figures IMO was a bit ambitious. The exploration target is just that.
This is different to indicated and inferred resources. Anytime you have an exploration target you'll periodically drilling to convert exploration estimates into measured, indicated and inferred. With drill hole spacing generally determining which classification the resource will go into. 100m, 200m, 400m, is an ok rule of thumb but varies depending on the deposit and type of mineral etc.
When the resource estimation came out and the secondly the drilling patterns to me it didn't look like a lot of the resource would convert. I think a lot of the drilling (outside the indicated and inferred zone) was a bit more sporadic somewhat intentionally such that follow up programs could be a little bit more targeted. i.e infill drilling now occurs on the higher grade, thicker areas etc. You can easily do a 10,000 or 20,000m program and only afterwards release you wasted a bucket load of drilling converting thin/low grade resources.
But as the case with all news events. If they exceed market expectation the S/P goes up. If they underwhelm they go down. Clearly many had priced in a higher outcome. All things considered for me the met work news is perhaps more important. They've now got a decent resource which from the graphic you can see where and how they could meet a 50mt target via further drilling and so how the graphite performs is important.
I've stated my view about a narrowed focus on assets and that only when progress is made on assets will there be a re-rating opportunity. IMV the met work and infill drilling (combined with some tailwinds of graphite pricing could achieve that.)
If i could wave my magic wand on strategy, i would sell non-core assets for cash and or shares and strengthen the balance sheet and pick either the lithium or earaheady tenements to drill.
The work on kambale will be less cost intensive in the near future and certainly post infill drilling where they then will likely elect to go down a PEA or SS phase. It would be good to commence some drill planning now such that post the graphite met work and infill there's still value creation from a program on another project.
Cash position is pretty solid and they have the good asset base. The issue with the incubator strategy is that if you don't progress assets with exploration they don't really go up in value. They have atleast now committed with Kambale - i'd like to see this continue and some conviction on another project in the same fashion. If you don't/aren't JV'ing the other projects they don't cost you much much money but equally they don't generate much.
So still holding here, albeit a bit of a break even. I wasn't going to sell on the news unless it inadvertently ran up massively on price. They are suggesting Q2 2023 the SS will commence post the met work. So that means over the next 2-3 months there's met work results due. Possible both the initial and the bulk scale results. Personally i will re-evaluate my investment based on that news, and whether other activities are being actively and promptly initiated. i.e. infill drilling and/or tangible exploration on other assets.
Whilst i still think the risk verse reward is good - and could still be good in 2-3 months time post that news - I often need to re-calibrate against other stocks i hold or want to invest in. In that instance others may provide better opportunity.
It's up to CDT to change the optic to the wider market over next 3-4 months and show a bit more urgency and commitment. Even if that burns cash a little quicker i think many are happier burning cash and having stuff happen. Admittedly that is an improvement that has been made over last 6 months - but need to really keep that momentum going.
From a technical standpoint looks like it may have hit a bottom on long term weekly trend.
Made that move down on large volume but could be a reversal candle. Next couple trading session will tell that story.
Overhead resistance looks like the 2.1c to 2.3c mark. Maybe Only a -12-13M EV at current which to me seems pretty cheap, good value for the asset base. Market will want to see some sort of commitment change as a company which may include divestment of non-core stuff. The met work of course and further resource definition certainly has some re-rating potential however will only get it so far. Some exploration success on some AUS assets on the side would really get things moving.
SF2TH
