“The growth of the reserve and the optionality to incrementally...

“The growth of the reserve and the optionality to incrementally expand production further reinforces Pilgangoora’s position as a Tier 1 asset of global significance.”

I have borrowed this paragraph from an article written about the expansion of PLS Pilgangora assets. By the end of next year they will be producing 2 million tonnes per year of concentrate.

PLS is about to do a feasibility study that could eventually see them producing 5 million tonnes per year of concentrate.

The way PLS has been growing the mine, has been in incremental stages, ie as each stage is ramped and making money, preparations are made for the next stage to be developed.

This in effect, means they are able to grow without interruption, dilution or excessive debt at a pace that suits them (and the market).

The way SYAQ has gone about developing NAL, is not unlike what PLS has been doing.

SYAQ are about to progress past that risky ramping stage where the cost of production is more than what they are getting for their product. By the end of this year, (if not before) they will be at steady state and not burning cash, (unless something unforeseen happens)..

It will be soon when the next incremental stage of development becomes possible.

SYAQ won’t be producing 2 million tonne per year like PLS but it may be possible to grow another 100 k on top of the 226 k they will soon be producing based on the drilling results that are in (and what is to come).

As a producer, they can pick and choose when and by how much they want to grow. If conditions are unfavourable, they can dial it back and wait until they improve.

Compare this to a small or mid cap miner wanting to develop a greenfield project. Now is not a good time for them, these are uncertain times where banks and investors are reluctant to finance projects that may not be in the money for an unknown period of time, (possibly a couple of years).

To make things even harder, there are ruthless big end of town types that thrive on exploiting these vulnerabilities.

For these reasons, I have stuck by SYA and PLS as I believe they have been sensible about how they grow and should weather this storm.