SP rise: Requires interest to turn, to increase buying demand (or reduce selling demand). Either from lots of retail holders, or fewer instos.
- RPM downgrade was the problem that pushed the balance to the downside.
- RPM has since started improving again, at least partially. But not to the same lofty heights. At one point it was 1.5Moz @ 2g/t, and expected to grow. More recently (in SS2) it was 0.82Moz @ 0.8g/t. I think it will grow in the next MRE, but not to 2g/t. But the 0.82Moz should grow.
- Increasing resource confidence might convince more instos. (SS2's numbers were relying on extremely inferred numbers in Valley) Confidence will jump in MRE in each of North, South, Valley.
- But will North rising above 0.82Moz in MRE cause the SP to jump? Not necessarily, since it jumped on Uphill's drill results already (though has since fallen back again). But if that means boosted economics for PFS, then I think it should help the SP at some point. Uphill is not only likely to boost resources, it should also fall within the shallows of the North pit design, so I think it'll boost the economics directly (replacing waste with ore in the mine plan).
- Other than boosting NPV and related metrics, other 'excitement' could help the SP. Anything better than expected. South and Valley were roughly as expected. Uphill was a bit above expected. Trumpet and Muddy Creek are the potential excitement waiting in the wings (Cathedral almost did it, but was a bit too low grade, being lower than Korbel, and too deep, and in a non-priority area, so got left on the backburner). A good goal for those 2 RPM area targets would be more along the lines of Valley or South Numbers, with a more optimistic goal being Uphill/North numbers. If they were Korbel/Cathedral numbers, it would not be very good (since those low grades need a bulk sized plant, which is intended for Korbel area, not RPM area).
- People could be under-estimating the benefit from pit slope changes and heap leach agglomeration in PFS. That could surprise to the upside, when the numbers come back.
- Pit slopes might boost various metrics - strip ratio, payback, pit life.
- Heap leach agglomeration could change the calculations for Korbel, lowering the CAPEX and improving payback, making development more likely. It's hard to say what is the likely preferred pathway between RPM and Korbel considering that, but PFS should show it (depending on the results of RPM area drilling).
- The road could also help, but that'll be so slow that you don't notice it (having an effect on the SP over years, not days). It changed from 'a potential road' to 'on track for half a road, with hopes of a full road'. I think SS2 'assumed' the road will happen, which is a valid reason for the SP to be very discounted relative to the SS2 NPV. If the road happened, then the NPV becomes more realistic (relying on less assumptions). Anybody buying based on the given NPV is taking a gamble. Smarter would be to take the mid-point between 'access-road NPV' and 'snow-road NPV', but I think we were not given the snow-road NPV. Instos in particular would care about things like this - calculating their downside if the road doesn't happen.
So the basic question - what will drive up the SP?
- Strong drill results (RPM Area, or RPM uphill/connection zones)
- Strong MRE (RPM North/Uphill/Valley)
- Strong PFS (RPM or Korbel, heap leach or not, +pit slope changes).
- The road happening.
- Any outside factors, like a big partner stepping in, or a grant.
(20min delay)