My thoughts are that SBR will be leaning heavily towards pursuing a mining application after a their initial Jorc resource has been released to market (assuming that they are happy with what they find), the reason is two fold:
(1) Reducing reliance on capital markets to fund future exploration (which ideally they want to accelerate).
and
(2) The infrastructure is in place ready, with competing infrastructure owners keen to process their ore. Looking at Kombat Copper, they will need to do a deal with SBR to appease their key shareholders and Government.
A good example of where an explorer has deciding to initiate a small mining operation to fund future exploration (because of local infrastructure in place) is Mining Group Limited (MNE).
I wont elaborate too much, but apparently these guys want to mine 5,000 tonnes per month of ore from a narrow vein mining technique.
It is worth comparing MNE's deposit that they are wanting to mine versus SBR's Guchab (at present) in relation to:
(i) Grade/Width intersections and accordingly volume.
(ii) First thoughts on technical issues that they will encounter in mining.
(iii) First thoughts / speculation of their high opex; and accordingly the susceptibility of their mining plan to prevailing copper prices due to their vertical vein deposit.
Further to point (iii)- you only need to refer to Discovery minerals DML to see how their near vertical vein hosted Boseto deposit was equally susceptible to prevailing Cu prices; and how the combination of
(a) reduction in Cu prices with (b) high opex (>$3.50/lb) and (c) a heavy debt load from initial required capex
...resulted in DML share price going from a $1.70 takeover offer by the chinese in late 2012 to $0.04 today.
With a nice volume close to surface and infrastructure in place, I hope guchab has a mich brighter future..
GLTA
Sutto
SBR Price at posting:
4.3¢ Sentiment: Buy Disclosure: Held
