Hi Black Horse,
It's a little bit of a tricky answer for two reasons - I come from an exploration background and am not an expert in mining, and also we don't know too much about the actual dip/plunge of the ore bodies yet.
But as an intellectual exercise, let's give it a go:
Based on the grades from say MAD15, including potential small but meaningful PGE and cobalt credits, we are looking at ore approximately:
- 23.4% Cu equivalent based on current prices
- or, 12.4% Ni equivalent based on current prices
- or, 27.3g/t Au equivalent based on current prices
Let's use gold equivalency as it's easier to benchmark at narrow widths.
1) Underground Mining - I'm not sure whether a conventional 5m stope would be employed, or a less dilutionary narrower mining width, but let's stick with 5m. The average grade of the 5m mining width would be equivalent to about 6.4g/t Au without the additional ore from the stringer/disseminated/semi-massive zones around the main high grade. Let's say that we're looking at about 7g/t Au average grade. This is about the same as Fosterville's reserve grade (Newmarket, Central VIC) and higher than Pagingo (QLD, Evolution Mining). Both of those deposits are excellent 2nd Tier gold systems, with Fosterville having complex refractory ore processing costs to absorb. So the current grades, even with the narrow thickness, should sustain an economic operation. Ideally there would be more thickness to the system, and as has been touted around the place, it is common to find that these types of systems end up thicker at depth.
For example (Ni) at average 12%Ni equivalent over 1.17m
- bulked out to ~2.9%Ni eq over 5m
- Combined total 1500m strike length, 150m dip extent, density of ~3.1gcm-3
- = 5m * 2500m * 150m * 3.1 = 5.6Mt @ 2.9% Ni for ~ 163,000t contained Ni eq
- About half the size of Nova at similar grade but with better economics (much shallower to top of system). It would also be about 70% of the grade of Spotted Quoll, but twice the tonnage.
- Any small increase in average width (to say 2.5-3m), dip/depth extend and/or repeat parallel structures would rival or better the Nova or Flying Fox/Spotted Quoll systems, at the currently observed grades which may or may not be sustainable over the entire system
2)
Open pitable - similar exercise. At the same width and grade, I guess we are looking at an equivalent thickness of 25m for 1% Cu, or 27.3m at 1g/t Au - assuming this thickness is sustained at a minimum, and has a decent strike/plunge and/or dip extent, these grades and widths are borderline economic.
For example (Ni) at average 12%Ni equivalent over 1.17m
- bulked out to ~0.72%Ni over 20m
- 200m strike length, 75m dip extent, density of ~2.85gcm-3
- = 25m * 200m* 75m * 2.85 = 1.06mt @ 0.72% Ni for ~ 7700t contained Ni
- 4 or 5 large pits would generate ~35kt Cu
- This is not ideal
Rationalisation
So, a quick glimpse at the grades and thicknesses observed so far yield the following thoughts:
- Yes - the system, based on information available so far, has the potential to rival or better Nova. This doesn't mean it will, it means the current ingredients and observations are permissive of such an outcome
- Depending on mining widths and methods used, the economics for shallow underground operation are potentially very favourable
- The real question to me is not are the widths or grades there - they appear they probably are. The real question is - will the system be big enough overall, have enough gravity, to justify an operation and become bankable
What would I like to see in order for me as an investor to consider increasing my stake or prepare a meaningful exit strategy?
- I'd like to see a couple of wider massive sulphide intersections so that the average widths we are seeing grow to about 2.5m or more;
- I'd like to see an aggressive drill program that concurrently steps out from the existing hits to define strike and dip extents, as well as tests new conductors (2 rigs)
- A little more of the nitty-gritty geology explained in the announcements - who knows, I may be a fund manager willing to get involved but may need a but more of the technical info to assess my risk/reward position of making a significant investment
I am looking forward to this week - the results, however spectacular or ordinary they may be, will give us further clarity on the strength of the overall system and whether there is potential for the return on investment we are looking for.
And for those who don't know - the average number of drill holes drilled before the confirmation of a major discovery over any given prospect is approximately 17. We have a long way to go before we get there, particularly on the western end of the Cathedrals shear zone.
Cheers.
(20min delay)