Thanks @Sandsman. 1.We feel the third resource is to the south...

Thanks @Sandsman.

1.We feel the third resource is to the south of Red Hill (RH) where some preliminary testing has shown large new concentrations of garnet - But its early days yet and more exploration has to be done by the company. That said, to our minds, the budding Red Hill Resource- from the data publically available now - looks like it's got a good chance to be much bigger than the PG resource. - but that's just our geos speculation.

We doubt the issue for HVY will be the availability of world-class GMA mine quality garnet - which is what the world is demanding now and which is in very short supply now (Plus GMA mine resource next door is now depleting after 50 years of exploitation).

to us the issue is how much garnet can HVY sell per year.

From our research, there is currently a 500,000 tons of global shortfall since India banned sand mining for eco reasons. (last year world demand was estimated at 1.85 million tons - and world supply just 1.3 million tons) And demand keeps growing as top-end GMA style washed alluvial garnet proves its cost efficiency and gets more and more adoption - and also due to new govt regs on anti-carcinogenic air quality at and around sandblast sites in the US and Europe -and increasingly now in the Mideast too.

In our opinion- there is room for HVY to produce and sell much more quality treated alluvial garnet than they are catering for. We think 300,000 tons per year is quite doable.(Especially with Aaron Williams' sales connections with the world's buyers) And this brings me to your next question

what is the cost to get into production?

We did have in-depth discussions with the company and the engineers independently as part of our research last year before starting to collect HVY. It seems there are quite a few options available to them - and I don't think it's appropriate to discuss that here on an open forum until we see the results in the PFS. Otherwise, I'm just speculating.

What i can say is we believe the PFS numbers should be an improvement on the last SS numbers. The SS was announced to the market on 12 Sept 2022. but just in case, here's the SS capex summary numbers below:

so as you see it is about A$76 mill for the plant (for which we believe Altradius will provide the bulk of the funding as has been announced)
Indirect and operational costs are around A$ 20 million more.
As you say @sandman its likely the bulk of this can be raised form
1. local community development grants local and WA govt
2. royalty funding deals post PFS.
3. And, hopefully from up-front payments from off-takers. As you may know, GMA has now limited their selling to just the 5 biggest global traders and won't deal with the other 25 or so below that- so those 25 (some of whom are big commodity traders) are now desperate to get new reliable sources of supply. Plus they all know Aaaron and dealt with him before as head of sales at GMA for NA and Europe.
4. if there is a shortfall then it would be filled by a CR - that's why I'm imagining there may need to be another 10 million shares issued only as I see this SP being nearer 1$ than 50 cents a share by then. But if you want to be conservative call it 90 mill or even 100 mill shares on issue - the numbers still stack up very well.

That current SS forecast is for a plant that can do 150 million tons per year.- which can make around A$120 mill per year in revenue.
- To show why let's call the alluvial Garnet price today an average of US$. 26 cents per LB (this of course changes depending upon the mesh size ) US$ .26c per lb x 2200 = USD 572 per ton. at today's USD AUD exchange rate that would be approx A$900 per ton.

So if HVY sell 141,000 tons a year as per their SS their gross revenue should/could be around 141,000 x A$900 = A$126 million per year.

After deducting estimated costs of A$38 million (see SS) - we estimate would be net revenue of around A$ 88 million per year. and a post-tax profit of around A$45 million per year. With even 90 mil shares (to be more conservative) that's 50 cents per share - at a 5x pe means around A$2.50 a share?? - or an A$225 mill market cap??.

so @Bargainstocks01 that would explain why RDG went to A$200 mill cap just before production started and they seem to have scrimped and screwed up their plant design. We agree that all things being equal under this scenario its not improbable that HVY could also reach a 200 mill market cap before production starts within 18-24months -(or a 10-bagger from here)

However - we are actually more bullish than that. We estimate that HVY could set up an IHC plant to do 250 mill tons for around A4135 million capex. - that would be around A$100 million for the plant and maybe around A$30 million for set-up costs. We do not know if that is the new model HVY and IHC may adopt in the PFS and have to wait and see. But we think its quite possible given the state of the Garnet market.

We also believe they could sell 250 mill tons Pa within a year or two of starting - then the gross income numbers from sales shoot up to around 250 mill x A$900 per ton = A$ 225 million. almost 100 million a year more annual income than the SS model! I won't do the share price calcs but they get muuuch bigger.

We of course won't know if HVY or IHC choose this option and if they do these full numbers will come out in the PFS. It depends on whether they have the confidence to go for the bigger option. However, if they go smaller at first, which would be more prudent, they can of course increase the plant later but it would cost more.

also just study the progress of GMA. When Jobson and Jebsen from Singapore started that mine they were initially just doing around 20 million tons a year- today GMA sell around 700 million tons a year.- why? - because they became the prime go-to sellers in the market who knew all the buyers and traders - and therefore many more opportunities and new sources of garnet supply opened up to them. We believe due to HVY now seeming to have more best-in-class product supply coming online than depleting GMA - that HVY could take over as the major global market supplier in a few years and capture all that growth and extra supply opportunities on top. We speculate That is why Aaron moved from GMA to HVY?

Look, that's our thinking and we hope we're right ? and we're taking a punt on it.- because even if we're 80% wrong we still see a big upside and little downside in HVY now at these cheap entry levels. We estimate with the Jorc upgrade at PG mine since the last SS we estimate its current NPV is around A$350 million today and its current Market cap is still just A$17 million. We are confident they could sell PG mine alone for more than A$17 million today. So where's the downside? take care of your downside in investing, do your research, look ahead intelligently and the upside takes care of itself. So far that worked very well for me for 30 years - and HVY looks like a new ripper of a deal to me. Im happy to be involved.

ask me any more questions I'm happy to spread the word now - as I'm now pretty long.

Thanks DYOR everybody and good luck.