Ann: Trading Halt, page-123

What I wonder is does GXY need the A40 resources due to the limited mine life of Mt Cattlin while transitioning to stronger assets at Sal De Vida and James Bay?
Perhaps when GXY got boots on the ground and access to A40 books after purchasing the Tribeca debt - a major strategic advantage at no actual cost to GXY holders - it realised that reality and perception didn't align.
I understand there was great hope that new exploration would provide a much more impressive resource for Alita's Bald Hill tenements, but here are the previously published numbers:

As such I believe GXY has no real interest any further in committing scarce resources to a marginal asset in C&M while it could develop SDV.
Lets not forget, Alita only pays off when spod pricing picks up substantially, at which point GXYs James Bay asset becomes economically viable.
I still question Bald Hill's ability to compete with other independent producers given the low grade and high waste to ore ratios even when the market picks up.
As a reminder James Bay has been described as a mountain of spodumene of a significantly higher grade and resource size than Bald Hill with minimal waste to ore ratios in a location that is geographically strategic to the North American market.
Its EIS is well advanced in comparison to peers.
For a reminder it is a very low strip ratio 40.8mt @ 1.4%Li2O open to the East, West and at depth.


Now onto the major topic of relevance.

Some suggest Mt Cattlin has a very limited mine life, but there is still room for further exploration to increase resource size - which has done so as required.
See announcement of January 23rd 2019 - "42% increase in Mt Cattlin Resource to 16.7mt"
This updated previous resource estimate dated June 2018.
Perhaps we should discuss the relevance of some of these values.
We can see the mineral resource of 16.7mt ore at a grade of 1.28%. Yet I think in light of recent announcements regarding the ore stockpile, the in situ resource of 14mt at a grade of 1.37% more accurately depicts the grade of ore remaining in the pit. It should also be noted that further in-fill drilling was conducted this year to define the inferred value.

Now for those that have been considering MtC as a low grade resource, I find the in-situ Mineral Resource grade of 1.37% to be particularly interesting.
Here is the depleted ore reserve comparison between Dec 2018 and Dec 2017.

You may notice that despite a year of mining operations the reserves increased by approx 3mt of ore but also at an increase in grade from 1.05% to 1.15%. This was an increase of 42.5kt of Li2O. This equates to a 53% increase in contained Li2O reserves.
By my estimates this represents nearly 6 years of production of 200kdmt SC6.0.
If we were to use the classified in-situ mineral resource along with stockpiles we are closer to 10 years LOM remaining using the same parameters.
This of course assumes that no further exploration to expand the resource is conducted.
It also does not take into account the planned reduction in mining output.
I am sure there are others better suited to explain the merits of comparing in-situ Mineral Resource estimates - depleted for mining - vs the stated Mineral Reserves, however the difference in grade is intriguing.
Looking at the Reserves alone we see a significant increase in grade year on year.
I think perhaps @Thesi and others may have a better idea of the expansion potential and nearby tenement prospects.

I'd like to discuss the stockpile ore at this stage.


We know it is typical practice for processing operations to maintain large quantities of lower grade ore stockpiles for blending purposes as demonstrated by the ore stockpile of 2.7mt at a grade of 0.82% Li2O. We now know that approximately 1.3mt of this stockpile is basalt contaminated ore which causes major issues with processing and up until this point was unsuitable for processing.
We have an indication of the effect of unwittingly processing this type of contaminated ore as the Sept Qtr update showed. Part of the reason for the 1% fall in recovery rate was due to an unusually high concentration of basalt in a small batch and resulting under performance of the final optical sorter. Major changes were made to the final optical sorter in September in response and this resulted in immediate benefits.

We have since learned that a front end optical sorter will be installed to now process this previously unsuitable ore at a cost of $1.5m.
This is an impressive innovation that directly addresses the concerns that some have of a cash burn.
It has also been advised that upon initial optical sorting and the rejection of basalt, the feed ore will be an equivalent of 1.2% Li2O at a reduction of volume from 1.3mt to approx 850kt. Note this is a very small loss of contained Li2O from front end optical sorting.
There has also been mention of improved mining techniques to better target and sort ore from contamination in the pit.
It is for these reasons and other publicly stated ongoing improvements being implemented in the processing plant that I believe a recovery rate of 60% is achievable and that a 59% recovery rate for calculation purposes is a reasonable input factor.
With the intention to reduce mining output by up to 60% over the next 12 months and a clear indication that the new CEO is not willing to ship product without a fair margin, I believe it is time to take a closer look at the role Mt Cattlin may play over the next decade for GXY.
I believe it's resource LOM has been underestimated and does not allow for further exploration and the savings implemented by the YOP and continued plant improvements is impressive.
A 60% recovery rate is achievable and the availability of higher grade ore from the pit has been overlooked.
Mt Cattlin has managed to lift its recovery rate significantly while increasing grade of concentrate to 6% and increase throughput capacity and now the new CEO has implemented a strategy that not only maintains Mt Cattlin's position as one of the lowest cost operators globally, but lower cash outflows associated with production due to the mining reduction and use of previously dismissed ore stockpile.
Theoretically Mt Cattlin could reduce mining output to 40% given the higher grade ore available in the pit to mix with the 2.7mt of stockpiled low grade ore for a couple of years and still meet customer commitments.
Why do we need the marginal Bald Hill waiting in the wings for a spodumene pricing upturn when Mt Cattlin is much more attractive than at first glance and GXY has SDV to develop in the short term and JB in the medium?