G'day Ozbucheron.
Mate, I've noticed in this and a couple of your other posts:
https://hotcopper.com.au/posts/68283034/single and
https://hotcopper.com.au/posts/68332822/single some refreshingly intelligent scepticism, so thought I'd have a go at a response.
Where to start? Well, let's go simple ...it actually makes sense to stay as an exploration lease for as long as possible before converting ...because it's cheaper! The associated costs per block are less. And in any case, converting an exploration to a mining lease is a simple process.
My understanding is that there
has been market research done for the Ni-Co concentrate, and discussion with people like our cornerstone Rajiv Ramnarayan on pricing as well (note, Raj has a clay hosted nickel mine in Indonesia) hence the target concentrate grade of 1.5%+ Ni mentioned in the latest
Presentation (p.7).
However, the pricing on these sorts of concentrates is non-linear. So you get a bigger bang per percentage grade gain the higher you go up. The better the concentrate, the better the contained saleable metal, and the better the price per Ni tonne. So the step change in price from, say, 1.6-1.7% Ni is disproportionately higher than from 1.5-1.6% Ni.
But back to the target for a Ni-Co concentrate (after beneficiation) of +1.5%, Think about it ...anything that is mined above the target concentrate grade has the potential for direct shipping without beneficiation. So looking at Hole 8, the intercept above 1.5% is 49m thick! Okay, that appears to be more than twice the closest hole - but remember, this is a much higher quality PQ diamond drilling sample. That earlier hole was RC.
And it doesn’t have to be a massively large zone to have a significant impact on project economics as there would be significant contained metal which can be accelerated due to grade.
Yes, the orebody is variable or 'poddy'. - but that can offer an advantage. Damon identifies "Grade flexibility to commodity prices" in the
Presentation as offering the possibility to mix and match ore from different locations in the deposit as required.
'Poddiness' might present as a significant issue for a drill and blast operation - but doesn't apply at Quicksilver. The fact that it is 'free dig' means that there can be much tighter geological control (with the right level of geological drilling etc) so that the mining of the orebody is a simple spatial one where the decision on the mining block (or minimum mining unit) is a direction to differing grade bins and or waste.
The free dig nature of the orebody and flow on to low costs means that mining and stockpiling differing grade bins can occur to optimise the project economics, including the opportunity to direct ship parcels of high grade (especially during the construction phase).
I think one question on this which is sure to be looked at is whether it's better to direct ship, or to wait and deliver a premium concentrate.
Anyway, infill will give a much better handle on the level of variability. From Thursday's
Presentation, the infill drilling is planned to occur once the project enters into a formal Scoping Study.
Finally, yes the holes were inside the resource boundary as these were drilled to collect a representative, high-quality bulk sample for the metallurgical test-work programme, No point drilling outside the resource for those. The exceptional grade and extent of Hole 8 was definitely not expected.
But of course that leaves a big question hanging.
It is extremely unusual to be getting these sorts of Ni grades in an oxide zone without them coming from somewhere. This, combined with the magnetic anomaly, certainly warrant investigation. Hence the desire to drill deeper.
But this drill campaign not only has the potential to discover disseminated nickel. There's also the question of those Primary REE’s.
The ability to possibly hit
two different targets below the deposit is definitely worth drilling! Astonishingly, there have been no holes drilled at depth at Quicksilver to date.
If any of these holes are in the area of Hole 8 so that more detail can be garnered there, then its just more bang for buck on the drilling. A couple of holes into the fault would be nice as well to see what is going on there.
I've gone on a bit ...but my message is: don't write Quicksilver off too precipitately, Ozbucheron.
There's a lot of thought going into all of this.
