The time spent in the HC sin bin a short while ago allowed me to...

The time spent in the HC sin bin a short while ago allowed me to reflect on my behaviour, especially on DRE, where my brash style of commentary and share price warning seems to generate the most trouble. I'm sorry to be mis-read first DRE post back, I truly meant that warning about another company's very relevant presentation so as not offend those who would be. This thread is General Discussion, so it's appropriate I expand upon the nickel price topic another poster brought up here. Beyond further expanding my reply here, it seems appropriate I start my own thread along the lines of DRE SUM OF THE PARTS VALUATION, where I can break down DRE's projects and potential in light of peer comps (as the market does daily).

The first point to note is Indo's Laterite AISC FY25 is ~US$4.80/Lb, which is actually higher than the highest grade massive sulphide deposits like Nova. The current price ~$7.50/Lb is still lower or breakeven with lower grade, higher cost deposits like Cosmos, Forrestonia or Savannah...


Below industry AISC curve is 2021 and so way out of date for inflation. Still, it shows some of the super major massive sulphide producers are still very profitable below the FY25 $5/Lb Indo laterite ASIC. Indonesia has really only ramped up cheap production since 2020 and they need to make a lot of room to take their supply by pushing higher sots producers off the RHS and into closure.

Low grade disseminated deposits are toast! Especially ones to be developed in the middle of nowhere from scratch, without lots of good infrastructure and sunk costs at hand. This is what "structural change' means for a commodity... large, cheap new supply changes the cost-curve and price structure of the market, meaning a lot of high cost producers close down, and high cost potential producers never get developed.


In short, Indonesian nickel has an AISC ~US$5/Lb in 2025

My point was that Indonesia will seek to maximise profits rather than production once they have muscled into the supply they want. That does not mean the nickel market hasn't structurally changed, for a very long time, regardless that Indonesia is prepared to allow the nickel price to rise for max profits. Any new producer needs to consider their new supply will bring a response from Indonesia and other supliers desperate to stay in business, and that new developments beyond demand growth will cause the price to fall long enough to scare financiers from developing new projects (ie oligopoly behaviour).

New discoveries of large, high grade massive sulphide deposits can force their way in and push others out, but the disseminated-matrix style of the Money Intrusion DRE were pivoting towards looks like a dead end to put it mildly. What about discoveries of large, HG MS deposits in the Kimberley I hear you ask? Let's go to the video tape...



The Ruins Dolerite (or analogies) that host the Savanah Mine, Merlin and Dog Leg prospects are situated in the Lamboo Province. The Lamboo Province is generally outcrop to subcrop, old time prospectors have walked over it for a 100 years. The only major nickel or copper mine in the Lamboo Province is Savanah, discovered in 1973 by Anglo. That's 50 years between economic base metal discoveries in an area of good outcrop

That's OK, like IGO have shown with their recent Dog Leg discovery, using geophysics can target massive sulphides in Ruins Dolerite where is doesn;t outcrop. Pity that Dog Legs is a tiny massive sulphide body (no, not an oxymoron), like the other smoke keeping the explorers on the hook. Pity that DRE has already done loads of geophysics and follow-up drilling, because after geophysics fails it's needle in the haystack stuff and time to give up imo.

So, a bit for the bulls and bears there. The demise of nickel sulphides has been exaggerated; HG massive sulphide deposits are still a good target even if disseminated sulphides are heading off with the dodo. A very large area of good generally well exposed Lamboo Province has only delivered one economic deposit development in 50 years (now uneconomic on account its only 3% Nickel). If your an exploration optimist, there is always hope of that next value-add discovery. If your don;t like liability projects that keep soaking up CR money with nothing to show for ti, then maybe not so hopeful..

GLTAH