hypothetical

posted this in PDY
When ever you deal with a specci stock, the word hypothetical has to have some relevance as what we are doing is putting a value upon hypothetical or well founded educated outcomes based on little bits of information, sometimes we get it right and sometimes we get it wrong.

40% of this strike line, which is 10km long, produced a maiden JORC of 212m tonnes per km of strike length. Let's not forget that there is up to 30km of strike zone in the entire tennaments. If you were to extrapilate out 212M tonnes per km of strike zone, on the initial 10km, you are looking at a hypothetical JORC in excess of 1.12B tonnes of ore. Using plus or minus 15% you have a JORC for this strike zone between 1.8B tonnes and 2.6B tonnes.

Now, let's assume, and I hate the word assume because we all know what it does to you and me, that the initial DTR was within 10% of a lab result, around a 25% conversion rate now means that we have somewhere between 450M tonne and 550M tonne of saleable product from the initial strike zone.

There has been much discussion about the level of impurities and without quantified lab results calculations are hypothetical.

One thing that is not hypothetical is that any FE mine that can produce 20M tonnes of ore per year for 30 years is a very large and very profitable mine. Extrapilate that out and you start to talk about 4 or 5B tonnes of similar grade ore of the entire tennament, along with 25 - 45M tonne of DSO, all of a sudden you are talking about a mine that is on par in size with anything else in the greater mid west region of WA. Let's not forget that GIR is valued at close to $1B. MMX at it's height was valued at 2.5B. The market now values PDY-AGU at under $60M.

50% of all FE production comes from a benifacted hematite. This continues to grow. One article that I read suggests that this will be in excess of 60% in 10 years.

Two things are not hypothetical: 1. the world has a growing appetite for steel. 2. Discoveries of DSO does not keep up with what is being dug up from the ground. 3. Iron Ore prices will continue to grow. 4. There will be a railway line in port built through the mid west by the time AGU-PDY is ready to commence production. Anyone can discover a FE deposit but it is about one thing, logistics. SDL may have a huge deposit in Africa but it will require $6 - $9B to get it's first load to port. Mid west mines at least have the option of sending DSO by road, it may increase the cost of FOB but at today's prices it still leaves a nice margin.

Yes it is disappointing that we did not get the DTR results from the lab but I am sure that other people have spoken to people in AGU-PDY and have also heard that results will be similar for the hand held DTR results.

Back of the envelope and back to the hypothetical world, my calculator does not have enough zeros on it to work out what 1B tonne of shippable ore with even a margin of $15 per tonne, would be worth to shareholders.

IMHOO - At a stab in the dark, enough for me to retire with a very large yacht, I don't think that this will happen tomorrow or next year but I'm sure over 15 years. No one likes to see their share value drop but I still hold and manage to buy a few more from the panic merchants. DP