Mien thesis analyzing der DFS of SIR comparative to POS and der...

Mien thesis analyzing der DFS of SIR comparative to POS and der other Nickel stocks based on ore production, mine life, capex, ore grade and mill throughput as announced in DFS's and ASX announcements (updated today) -

- SIR has substantially higher mine life than WSA, MBN or MCR but less mine life than POS at 10-20 years
(based on 10 years in SIR DFS, 5 times longer than MCR mine life at 2 years and much longer than WSA & MBN at 5-6 years, POS mine life is 10 yrs stated in 2013 POS DFS just for windarra/cerberus plus 10 years for POS new black swan/silver swan mines in Kalgoorlie)
- der proposed mine life extensions based on SIR new discoveries should extend to 15- 20 years and the POS acquisitions of der Kalgoorlie swan mines and plant will extend their mine life to also 15-20 years being the 2 longest mine lives of all Ni stocks considered
-SIR will have larger NI ore milled (1.5MTpaSIR DFS) than any other Ni stock at a higher grade with higher concentrate than WSA, MCR and POS however POS will only use 50% of their mill capacity of 2.2MTPA milling at only 1.1MTpa)
-SIR has its own mill processer at 1.5MTPA once built based on SIR DFS which MCR WSA do not have as they use others processers on an offtake deal, POS has a substantially larger processer (2.2MTpa) with much higher ore processing capacity than all other NI mines in WA even exceeding SIR, WSA MCR which cannot mill 2.2MTpa due to BHP shared use
-SIR has higher grade 2.3% (SIR DFS 2.1%-2.6%) than the lower grade operations of MBN 0.46% in brazil, murrin murrin 0.9%, 0.6% POS black swan, 1.8% POS windarra averaging 1.3% NI but this SIR grade is much lower than MCR at 3.19% and WSA at a high of 4.9%
-SIR will have cheaper cash cost at $1.5USpd-$2.09USpd (SIR DFS) than MCR ($4.80-$4.23USpd), WSA at $2.70USpd or MBN or POS
- SIR will have 4x the income of MCR, 2x POS, 2x MBN, and higher income than WSA currently at $280M
-SIR cash cost will rise strongly increasing to peer level once cost blowouts and the higher expenses of a FIFO workforce in a nullabor location start affecting profits on its high debt medium grade operation.
- SIR needs to source higher grade ore to solve this cash burn from high debt and high expenses or mill more higher grade ore at full capacity of 1.5MTPA as its a medium grade ore miner on its current DFS
-MCR and WSA do not have their own processer plant and truck it to other plants to process despite this WSA still has a lower cash cost due to using BHPs no 1 plant in WA (which is up for sale).
-SIR and WSA will have larger debts whilst POS with Andrew Forrests 25% shareholding will have low debt of $50M and MCR has no debt.

Experienced Teams - Robert Dennis who is COO of SIR is now a director of POS joining in the last year and has turned around POS with Andrew Forrests backing - they are work colleagues going back to 1992-1999 in the Anaconda Nickel ANL days when Dennis worked for Andrew Forrest in the murrin murrin mine which Glencore Xstrata took off WA shareholders for kaput. Dennis and Forrest worked as a team long time before SIR on der low grade high mill operation at murrin murrin - having loyal experienced teams with good contacts will help SIR and POS more than any bank debt or project parameters in the DFS of either operation.

SIR is the market and bankers darling with "world class deposits" with equivalent MCap as WSA of $1B as it has larger resources, much lower cash costs but its average NI grade of 2.3% is much lower than that of WSA 4.9% and MCR even at 3.19%. The market ignores SIR large debt burden, no income or infrastructure for 2-3 years, mine start in 2017 and assumes the project built cheaply on time and on budget in southern outback - bah humbug. I expect cost blowout and much higher cash cost than in DFS - Dennis and Creasy right men for dis job.

WSA and MCR have higher grade operations and still struggle to break even in last March 14 QTR whilst MBN went into administration in Jan 14 and perth shareholders shafted getting back shares at 2% and losing 98% cash value with bank/bond holders taking over MBN and its low grade high mill operation in brazil.

SIR is a medium grade medium mill operation with large reserves and potential – based mainly on bank or bond loans and shareholder funds with higher debt than all other NI miners outlined - I postulate more CR will be needed to reduce this debt on many occasions over next 5 years - excluding bond covenants will avoid the trap set for FMG which they got out of in Sept 2012 by refinancing their bonds just in time. Yet the SIR debt will be even larger than MBN debt of $400MUS which sent it under this year.

Low debt, higher grade, low capex, low cash cost operations are nirvana. Whilst WSA, MCR and even POS are such operations SIR is not as assessed by Petra Capital on its analysis of 22 July 2014. On almost every metric such as EV/Production or market cap/resource basis, SIR is rightly valued higher than most all other NI Stocks according to Petra Capital.

A strategy may be to pick the SIR top and when will it be time to sell SIR? $5-$8 maybe or when bank finance obtained 2014 or when debts start rolling in 2015/17 but I cannot see it rallying much higher after lengthy construction and larger expenses wear down der shareholder and lenders exuberance. Once the top is picked in SIR it may be brutal by banks/traders as it was last time at $5 and sent back down to $2.

If a top producer such as WSA can only make a 2.1% profit on its income in Mar14 QTR then what can SIR do in 2017 with much higher debt of $500M - $1B and larger expenses. If NI price stays high for next 3 years then all can profit but as seen in last 20 years if NI price goes back to their lows around 2017, what happens to SIR share price then?

For those who have already made a fortune in SIR from 5c and then from 50c well done we all applaud achievement but greed is a strong human emotion than can paralyse and make one ignore mathematical realities such as the recurring nature of the normal distribution chart ~~~~~.

To the uneducated peasants who ignore her Doktor, I remind class to read above thesis and do not think with heart but with logic and mathematics as mathematics is the universal language and infinite repeating recurrence of normal distribution wave chart is inevitable just like the power of gravity.

Better to sell at top in SIR and buy POS low debt/existing infrastructure/high mill operations with low valuations & low or no debt. SIR has upside potential to go to $5 near term wunderbar and maybe even $8 if Ni price moves to Citibanks forecast issued today at $10USpd for 2015 but if this changes then it may end up back with its peers.