Come in spinner Nickel Rim South was found by Glencore who have...

Come in spinner

Nickel Rim South was found by Glencore who have been mining at Sudbury for over 50 years and have already spent billions of dollars on infrastructure including treatment plats, plant and equipment etc. The company has an integrated business from mines to smelter to customer just in Sudbury alone. The reason why this deposit was economic to them was that the costs of putting into production was less than a third of that if it was it was stand alone out in the desert with no infrastructure.

What made it economic was that the company had already all the treatment plant, all the mining equipment, mining personnel, did not need to finance it (and therefore did not require a DFS), had a much deeper understanding of the geology (been mining the area for 50 years or more) therefore get away with less drilling (ie accept a higher risk), and most importantly paid for the development entirely from cash flow from the multiple mines, mills and refineries it has already in opertaion nearby.

The reason why a "offhole EM anomaly by the way that sat on the shelf for 6 years before they got around to reevaluating it and wedging off the original hole" is because they would have prioritised exploration to mine extensions and shallower targets.

If MRD will need to find something much bigger than Nickel Rim South it will not be economic given that there is no existing supporting infrastructure out in the middle of nowhere. So you really are hoping for the best of the very best. If you find that then I guess you wouldn't need to worry about funding the development as the company would get bought out as it would be a tier 1 deposit, but MRD would still need to find $100s million to get that point.

Have you thought about what happens if it turns out to be a nickel massive sulphide of grade with 20m @ 2.5% nickel (Nova is 2.3% Ni)? What happens next? At that grade and width its not economic it needs to be over 6% or over 50m width (consistently). What does does the company do then? More diamond drilling at $130,000 per hole to see whether the grade or width can improve. The majors wouldn't be interested until more work was done, the mids would also wait and see and not want to commit precious capital to such a project until the economics can be determined better. IGO didn't make a move on Nova until after the mine studies were completed and the finance sorted.

The best outcome would be that you don't find anything and the management move on and test targets nearer the surface. There is fine line between brave & innovative and stupid & naive and that line was crossed about 300m further up the hole.