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27/09/18
17:38
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Originally posted by pezsaz
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Hi Stockfanatic
Yes. I am very comfortable with the NOVO deal. One of the complaints made about PIO is “too many” options and moving too slow. Shifting priorities and a flavour for every month. I think PIO mgt is moving away from that.
- Caesium is a key priority to get cash in the bank, my belief is will add about $7-$10m to cash as a conservative estimate, and of course there is upside in the overburden plus possibility of more C’s, maybe lithium. We will know in 4 months
- Appointment of recent experts supports focus.
- All these things keep us in the game for a company maker. Maybe Nickel/Cobalt
On NOVO. Some scenarios;
a) If NOVO find nothing hugely economical, then it was a great move from PIO. Not only does PIO make a little money upfront, but critically avoided opportunity cost of the open ended expense to explore, and certainly spared of impact of this being diversionary and prioritised
b) potentially could have kept this as an asset in our back pocket in the event that surrounding areas produce strong resource/results. That said, might be years away. Some shareholders would create noise on targeting this as a priority. Scope creep and ambiguity of priority
c) some might feel or suggest that we could have negotiated a better deal than 70%. But how much and what is the practical difference may be prudent to recognise, over the principle. may have been negotiated (I doubt it though as DC has proven himself a strong negotiator). But let’s say 50%. Well, if NOVO confirms a $350m asset, we stand to make $105m. 3 x our MC. A company maker in its own right. The difference is $70m but at the risk of taking many more years to find versus having this accelerated, or, being diversionary without yielding an outcome.
More broadly we [PIO] get a free carry to production decision, but more importantly signals a much needed narrowing of PIO’s focus. Nickel/Cobalt. And the chance of developing something big will attract a lot of investors
Cheers
Pez
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Thank you for the reply. Yes, they have the strategy of keeping a foot on every minerals to ensure survival. Hopefully the caesium gives them a break away from old habits. The $1m placement doesn't help support that view but maybe that's the market condition now. New perspectives from consultants and resourceful shareholders (you included) will give them the needed push before too much cash burn. $7m will be breakeven (my guess) from the Cabot loan and thereafter a margin if more caesium. Will be watching.
Cheers