BEFORE anyone jumps up and down I don't own any PIO shares, I have no interest in moving the shares one way or another.
In my view too many on HOTCOPPER and on the PIO threads, in particular, see the world through rose colored glasses....this post is an attempt to educate this thread in some of the realities of mining and the costs involved.....it is not an attack on the PIO management nor any individuals.
There is NO feasibility study in the public domain....nor any value per tonne of pollucite published by Pioneer....in fact if they were to publish how much they expect to make (production forecasts) they have to justify those assumptions to ASIC and ASX (Info Sheet 214) and report the study according to the JORC Code.
As a guess from the research available the pollucite is probably worth between US$1200 and US$1900/t depending on the ultimate Cs grade that is delivered....the US$1900 is probably for high grade of >20% Cs.
From memory the resource is 10,000t at about 16% but there was some talk that the resource has decreased due to the complexity in the pegmatite.....
Assuming a Resource to Reserve conversion of 70% (based on other deposit types, not being able to mine thin, small, discontinuous pods of pollucite) and a 20% reduction in the resource there is around 5600t of pollucite within the Stage 1 pit.
Depending on the mine dilution and given the complexity shown in the cross sections it is not reasonable to assume there will be no dilution. I think it is reasonable to assume that PIO is likely achieve $1300/t and at best US$1500/t. This therefore equates to between $US7.3 and $8.4 million or between AUS$10 - $11.5 million (assuming an exchange rate of 0.72) BEFORE any costs.....
The stip ratio for a pit will be huge.
Say a pit that is 100m long, 50m wide and 40m deep and a density of 2.5 there would be around 250,000t, this assumes an inner ramp pit wall angle of 45 degrees. this is the size the pit will need to be to mine a 60m long pod of pollucite. The pit will contain around 6,000t but lets be nice say 10,000t of ore that results in a strip ratio of 26....which means that 25 tonnes of waste has to be moved to get 1 tonne of pollucite ore.
A mining cost of AUS$3.0/t this cost is probably too low as they will need to use small equipment and the $3/t is for large mining equipment....I estimate the cost to be about $1.0 million.
This cost excludes any capital costs in the access roads, blasting, staff (mining, geology, planning and approvals), assays, fuel, accommodation, heritage payments and royalties, State Royalties (according to the Mining Act and Regulations it is 10% for direct shipping ore - cost about $1.1 million), power, crushing (if required), offices on site, transport to port, rehabilitation etc etc.
In my view this going to generate a profit (after all costs and taxes) of no more than AUS$5 million.
That is not a bad outcome as it will ensure there is no need to have an additional capital raising and more dilution of the existing holders.
This is a very rare system and there may be more pollucite pods to find but these are NOT cheap to find...check the drill spacing from the PIO presentations and releases...the Sinclair deposit was initially drilled 10m x 10m spacing and this was recently infilled (I can't remember the release date) but from memory this was paid for by a separate party, not Pioneer.
This ine going to make some cash and allow Pioneer to continue to explore but from the analysis above (please point out if and where the analysis above is incorrect) it is clear that this is not a company making mine.
If Pioneer find another deposit like the Tanco mine that Cabot own then that's a different story....But that can be said for any exploration company...if they find an Olympic Dam.....if they find a Golden Mile.....if they find a Mt Isa...if they find a Tanco....if they find a Greenbushes.....etc etc.
Reality is critical.
Cheers
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