I am increasingly confident MCR will abandon Miitel altogether in favour of Long/Durkin & Cassini and that Miitel was only included to demonstrate that using the known resource (not reserves) MCR could deliver on it's 5 year commitment to BHP.
The mining contract does not commit MCR to developing Miitel (extract below).
The contract encompasses a 5-year underground mining contract for the new Cassini Nickel Mine, where early surface works were recently completed, and a 3-year contract (plus one 2-year option) at the Northern operations (the brownfields Durkin North and Long Nickel Mines).
From the DFS, we know that Miitel
Has an NPV of just 19m
Has the highest all-in cost
Requires significant Sustaining Capital
Miitel is risky as the mine plan involves dewatering and rehabilitating the mine workings prior to operations commencement (The level of rehabilitation could be significant as water rusts ground support)
The DFS also states that it will replace the Northern Operations, however this won't be necessary if any of: (a) more ore is found at either of the existing Northern Operations (b) more ore is found in the exploration zone between the Northern Operations (c) Additional supply can be brought on from Cassini (we know there is a heap more ore that is not in the existing DFS)
Based on the above, I am (and I believe MCR are) confident there is significant upside to the DFS
MCR Price at posting:
72.0¢ Sentiment: Buy Disclosure: Held
