Ann: Investor Presentation - May 2021, page-75

I disagree. Assuming the GS maiden drilling defines enough tonnage to justify a restart, just the one stop-gap raising for me. PH and the team will then likely secure funding along the lines of PAN's recent deal for the capex-lite GS development and DSO (already discussed at length), which would presumably kick-in after our Board signs off on FID later this year.

Nice to see your amended June CR timing estimate. What a difference 24 hours makes.

At the risk of being tagged a filthy ramper, I encourage interested punters to do the sums on a GS maiden that throws up, dare I say it, ~14% average grade for, say, ~65,000t of contained Ni saleable output (ala SS maiden). If the resultant FID was based on, say, an initial 5-yr LOM (with more resource expansion drilling to follow) it would mean targeting 13,000t pa payable contained Ni sales (13kt pa x 5 yrs = 65kt initial LOM). Being such a high-grade ore body (in this example) would mean somewhere in the order of only ~110-120kt pa of mined raw ore tonnage required to generate that level of payable contained Ni metal DSO sales. This would have a direct and profoundly good impact on the COP.

In keeping with this utopian scenario, imagine a resultant COP of somewhere in the order of, say, ~AU$3.50/lb. Based on today's spot NP (AU$10.50/lb), it would translate to a spot margin of ~AU$7.00/lb (aka 200% margin!). It would mean sales revenue of AU$300m pa, with AU$200m pa being FCF! Put another way, AU$1b (yep, billion) FCF over the first 5 years, before any further BS complex u/g resource extension! And that's at current spot prices, without any further improvement to the AUD NP!

Sure, the above is somewhat of a utopian outlier scenario, but it's not without precedent in this locality (think SS maiden). Think of it as a best case scenario. I would still be stoked with a 9% maiden grade for the same ~65,000 of contained Ni (payable). It would require more raw ore to be mined and transported (~190kt pa v. ~120kt pa), which would increase COP, but it would still be pretty juicy.

At around those (low) tonnages of required raw ore to be mined, hopefully punters get a glimpse of:
- why DSO is being seriously considered;
- why "high margin" is being thrown around by PH; and
- why the Board was happy to commit to speculatively drill-out the dual-purpose GS drill/production drive.

Naturally GS still needs to be proven-up, but it's food for thought...