Please help me Whisky, Wassa, Mining or whoever.
I’m obviously naïve.
I would have thought the SP should be higher based onThalanga alone and without fully factoring in the potential from Liontown etc.I understand there could possibly be a delay in mining Liontown (which is inany event located in a recognised mining district) as a mining title has to beobtained and Queensland environmental requirements particularly relating to wetseason issues therefore have to be met. However, this is a question of when notif.
Furthermore, the silver/indium etc potential at Orientetc is just that. There will need to be a lot of drilling and wet season issuesto be overcome before there could be a mine but based on initial exploration,the rarity of indium and the high silver grades it is still a positive for thecompany.
Accordingly, that brings me to the critical Hillgrovedevelopment.
As a generalisation Management have shown fromThalanga that they have the capability of bringing into production mothballedoperations that others have failed with. Management has skin in the game and indeeda director acquired shares earlier this month. Management has also succeeded ingetting Hillgrove to the point of operating at considerably less expense thanhad been envisaged before their involvement. I thought that it was expected tocost at least $60M to get to the current position. Furthermore, the BakersCreek deposit has provided a cheap means of providing revenue in the earlystage of development.
What are the doubts in relation to Hillgrove beingable to successfully produce gold (and antimony as a byproduct)?
There is undoubtedly sufficient gold to be mined giventhe historical mining in contrast to the limited amount of drilling that hasbeen carried out prior to RVR’s involvement. This has been reinforced by theEleanora and Curry’s drilling. It is certain that a 1m oz gold resource will bedelineated probably as early as within 2 months from merely upgrading theJORC2004 resource to a JORC 2012 standard. Hillgrove is recognised as having atop 10 in the world antimony deposit.
There has already been sufficient undergrounddevelopment carried out to indicate there is no critical problem withunderground mining. There is also the potential for surface mining as aconsequence of the Curry’s deposit drilling and the number of other prospectsin the vicinity of the plant.
It is difficult to believe mineral prices could reachsuch a low as to make mining unprofitable given the grades being encounteredand the possibility of significant antimony credits. The supportinginfrastructure (located close to Armidale) compares favourably to many othermines.
Is it the operation of the plant that is viewed as Hillgrove’sachilles heel? I understand there had been metallurgical issues in the past but that they had been resolved before mining ceased. Management is aware that Hillgrove comprises some refractory gold and doesn’t see it as a problem. Management is already carrying out testing to minimise any problem in this regard. I assume from what Whisky has said that it’s more a case of determining what is required to best resolve this issue and the initial cost to modify the plant to overcome this issue won’t lead to unprofitable mining. How big an issue is this?
Is there any other issue that could be deterring potentialinvestors from investing? I understand some may think the Hillgrove story istoo good to be true but that is hardly a rational response.
I appreciate there’s a risk in investing in anythingbut there seems to be little downside risk investing in RVR but tremendousupside potential. Some downsides have been reduced by the multiplicity ofminerals able to be produced, 2 separately located operations, the potentiallong life of the mines and the multiple possibilities of accessing ore for theplants. We may be entering a minerals boom caused by the printing of money andthe consequent building of infrastructure. Gold is also considered a reasonablehedge against any fall-out from the debasement of currencies.
What am I missing? What’s wrong with myanalysis? If it’s just a case of making profits is not the flavour of the monthfor investors, or RVR is at the moment too small to be on the radar of theinvestment community with the firepower to make a difference to the SP, thenI’m happy to be patient and wait for RVR’s significant re-rating. However, isthere something more fundamentally wrong with my analysis?
