That's a pretty fantastic video, I finally got around to watching it properly for a second time and some points really stand out.
1. It took them only around 5 years to prove up a 700mt resource. Things started slow but seriously ramped up once they understood the area more.
2. The copper was thin but went on for kilometers (5-10m @ an average of 2-3%, sometimes more) and was also drawing Kupferschiefer parallels. Apart from the thin and wide areas they had puddles where grades were much higher or thickness increased. Does this sound familiar?
3. After enough time exploring, kakula ended up dwarfing kamoa and being even better
4. The way pyrite interacts with fluid
5. The flexibility in mining processes letting you choose a variety of methods with sedimentary
6. During the question time it's really illustrated how geologically thinking outside the box can have insane results and things can change dramatically in a very short period of time once that's figured out. Even though a deposit can be 10km away, the expected characteristics can vary to wild degrees.
There's a lot that one can take away from studying the other sedimentary copper deposits. Here's my somewhat balanced analysis of how this relates to AW1. I'll start with the bearish and work my way to the bullish.
1. We're not as high grade as kamoa/kakula and I doubt we will be reaching 700mt in the next 4 years. However, this does not make what we have bad in the slightest. Our grades are "high grade" in the MRE and if this continues, highly economical. We also don't need 700mt, even 100mt at our current copper grades would suffice for a 10-20 year mine life. The very fact we can compare our exploration to one of the world's best copper mines speaks volumes.
2. Our operating costs will be higher. It's the DRC vs Somerset Island so perfectly reasonable to expect higher costs. However this should only slightly increase costs and I highly doubt it would impact economics to a large degree. I think comparing us to Africa here is not reasonable, we should be compared to the other northern arctic mines. Russian mines present a good comparison here. Though we have limited data, we can see they operate in these conditions with similar grades and potentially higher costs than us. Udokan copper is one that springs to mind here. Similar grade to us, more extreme arctic conditions than we will have, they have rail 30km away we have ocean and they raised an insane amount of capex. We are high grade enough from what we know already to indicate very good economics potentially coming out of our PEA if these other arctic mines are anything to go by.
3. As other posters have alluded to, the fluid formation mechanics draw similarities with storm. I'm sure there are better armchair geologists here who can explain this in more detail but on a basic level it's quite promising since it means the search for the feeder zone at storm is still on and the more data we get while doing other drilling, the easier it will be to figure out the puzzle of where those fluid bearing zones are. If anyone is an actual geologist please chime in with a better explanation than mine, because I don't feel like I do the concept justice. The video helps understand it to a greater degree so anyone interested should watch.
4. How this ties into DSO. This is where I get the most bullish. It's clear that Ivanhoe sunk a huge amount of drill holes to discover kamoa. If we assume that we are only shooting for around 100Mt prior to commencing a DSO operation, we will only need a fraction of meters drilled. One can then extrapolate how big the upcoming drilling seasons (and therefore dilution) would be and if we assume that now the AW1 team understands the geological code and can be consistent like they were when unlocking Kamoa, it's plausible to expect the following scenario:
- 10-20m raised each year until DSO is released
- Drilling on average seems to increase the MRE by 20mt for $10m (which is a fair assumption based on this season being double the drilling of last, costing 10m and we got 17mt roughly last season)
- MC steadily increases as a % rate of the MRE (standard practice, so a fair assumption)
- If the MRE doubles this year, then continues adding 20-40mt per year depending on how aggressive they go...
- This implies that we are (rough figures here) diluting around 10-7% for the 2025 season, 5-4% for 2026 and 4-3% for 2027, after which point hopefully the DSO is running and we can really accelerate exploration of our massive landholdings.
- I find this to be perfectly acceptable returns on capital as we should now see a less volatile MC and more consistent based on slow and steady progress
Obvious disclaimer for people, these are 5am napkin math calculations and not to be taken as hard numbers. This is just my opinion and so I would encourage everyone to do their own research and come up with their own scenarios and please share them and we could compare potential numbers. Happy to explain in more detail the assumptions behind my expected dilution figures if things are not clear enough.
I am personally quite optimistic that our exploration dollars will yield a good return on raised capital, unlike some of the other juniors who don't spend on drilling. This is the single biggest reason I am so bullish here, I like to see aggressive drilling.
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