No its not too confident - SPR does not need anyone and finance will definitely not be a problem. SL did state a few weeks ago at the Sydney presentation that he has a number of finance providers knocking down his doors and I took that to include debt providers not just equity ones. In my view most if not all of the restart finance will be debt but they will probably need to raise equity for more exploration until positive cash flow from production occurs.
While speculation on my part, I am reasonably confident SPR in 12-18 months, is going to have a bigger resource and reserve than BGL with an ASIC in the same ball park (ie within a few hundred dollars). In his last presentation he stated SPR will have very high margins ie low ASIC.
How big a resource and reserve? Adding NN ET target the MRE will be between 2.35m Oz to 2.65m Oz and the grade will be circa 4 g/t just for Dalgaranga. Then add in WW, 4P and SF ignoring any others they find - currently the MRE for these deposits is about 750k Oz and they should be able to double that MRE giving an MRE of between 3.1m Oz (BGL's current MRE) and 3.4m Oz - I believe that is achievable in the next 12-18 months. Then there is blue sky after that. Not sure about the grade of the increased MRE from these other deposits but if they are like NN with grade increasing with depth then a grade of 3g/t to 4 g/t is possible.
But SF is a wild card in my view and if its anything like NN then my figures above may be on the low side. And there will be more as they drill deeper at NN sometime in the future.
The real clincher for me is the reserve. I loved SL comment in his last presentation that they are going to mine every single stone in NN ie it will have a very high conversion of inferred to indicated to reserve. I also note the other deposit already have a high proportion of indicated for open pit resources.
Look at the image below and note that up to 300 RL almost 100% of the NN MRE is in the indicated category and the only reason its not that level deeper than that level is because they have not undertaken enough drilling! SL's comment above and a very high conversion of inferred to indicated suggests that most of the NN MRE will end up as a reserve. Hence my view the NN reserve will exceed BGL's existing reserve of 1.34m Oz with more to come from WW, 4P and SF. While I admit I am speculating it is my view the SPR in time the reserve at Dalgaranga will end up substantially higher then BGL's 1.34m oz with a corresponding difference in BGL's MC currently about $2.2b once they are in production.
As another poster stated, and I agree, NN is a much superior ore body to BGL's orebodies.
SPR Price at posting:
65.5¢ Sentiment: Buy Disclosure: Held
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