Hi Ham Child, the problem of course is we are already seeing comments from informed holders that approx 25% of that reserve is in fact low quality unsaleable product that the company is looking to stockpile, Refer this post from
@sirrobbo , where he comments
" and is three quarters of our resource, as far as I am aware we will stockpile the low grade crap every other Tanzanian hopeful is trying to get to market with until the price recovers. "
https://hotcopper.com.au/threads/an...040811/page-201?post_id=41338213#.Xcc2qdHZWhAI initially dismissed this comment due to its apparent motive just to attack other Tanzanian hopefuls but then I did recall that neither of your two binding Off take partners have requested this category. So perhaps the stockpiling that Sirrobbo seems to be aware of is correct but more to do with a lack of customers for this product size.
Of course if stockpiling is being considered already then this would be a major red flag, as Sirrobbo points out this equates to 25% of the resource, and that has to be dug up and processed regardless, just for it to then head off to a stockpile. No cash generated but plenty spent digging it up and processing it.
If in these early days informed holders are already expecting 1/4 of the reserves to be stockpiled then this really is a poor reflection on these reserves. Aren't they supposed to be economic before being classified as "reserves", though I do get confused with all the differing terminologies in the JORC code, so interested to hear from some JORC informed posters on that.
That then also leads us to how saleable the "Super Jumbo" category is at the WKT required price. Again I note none of your two binding termsheets have actually asked for super jumbo, they just want large and Jumbo. So unless they can come up with some customers willing to pay Super Jumbo prices I am wondering if they may have to end up stockpiling this stuff as well until they can find a customer that actually wants it.
Obviously the mine economics will deteriorate quite rapidily if all this stockpiling occurs due to lack of customers for your "reserves".
Anyway, here is the announcement that substantiates that neither of your two binding Off take partners require the small stuff that Sirrobbo mentions nor the Super Jumbo category. For those that have trouble reading announcements it's on page 2 , table 1 the general specification is "large and Jumbo"
https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTDYD4Qi/yheZt/xtke92GA==It does leave a major hole in your "reserves" if one is to exclude these two categories. Wasn't super jumbo suppose to be the "in demand" category? Strange your binding term sheet partners don't seem to want it?
All in my very humble opinion as always.
