four kings

Four Kings

1. Cash is King

The $58M deal has been done with 99.6% approval from the shareholders. Say no more.

2. Grade is King

If you are a developer, like NTU, high-grade results pull in new investors because the business is being progressively de-risked. And existing investors accumulate more. (I have.)

If you are a producer, high-grade results bolster the economics and investors choose not to sell because of added dividend growth potential and higher takeover price expectations.

Jubilee sold its jumbo grade nickel deposits to the Swiss for 3 billion.

3. Size is King

The updated JORC will be announced in October. It will summarise all drilling activities west of the border, which is only 12% of the total Browns Range 1800 sq.km tenement area. See it as 60 km x 30 km. Results thus far from the WA side indicate a 10-year mine life.

On the NT side, XRF meter flags be-speckle the Browns Range Dome. So, all things being equal, that's 85 years of resource to target. Add John Galt, which is being drilled this year.

The NT tenements extend from Browns Range down to Boulder Ridge. Their total area is 4842 sq.km. Think of it as 100km x 50 km. Or all of Sussex and Kent east of the London to Brighton line.

By the way, Boulder Ridge has more faults than a tennis match.

4. Gross Margin is King.

Jack Lifton's site currently measures the NTU basket price at 72 USD/Kg. Expect this to rise as RE prices get up off the canvas. David Rijkers wrote a stunningly comprehensive Desk Note six months ago and he assumes AUD30/Kg OPEX.

On today's exchange rates, you get a Gross Margin of 50/80 = 63%.

The Scoping Study is due end of year and upside surprises won't be out of the question. The Hydrometallurgy work is now reaching above 92%.

What's the Wild Card?

The un-named offtake prospect. The maiden MoU was announced last Christmas. As Conglin Yue's role in NTU takes deeper anchor, a Chinese MoU partner seems increasingly obvious to me. This MoU prospect has not yet been named, but as the project de-risks, the naming day inches closer.

My tip is Shandong.

Shandong have a well-established Australian presence.

Shandong will have traded bulk resources with Conglin Yue over the last decade and if you are Chinese, it's all about relationships.

Shandong will have an eco-political mission of vertical integration on the eastern seaboard and this requires a trusty supplier you know well.

Shandong see CY on the supplier's Board ... they won't need to ink a capital-intensive JV elsewhere where, frankly, the risks could be palpably greater.

And the Four Aces?

Management!

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