Re quality product and volume, I think 64-65%fe product is very marketable. They can mine 2mtpa for 23 years just with the current hematite resource. A resource upgrade is expected before Christmas also.
I think you look at this by comparing it to SDL. EQX will never have the DSO resource of SDL, and the mining output p/a isn't anywhere near SDL's possible output. No one should ever pretend that EQX can match SDL on resource because it can't.
However, that does not mean it's 64-65%fe product will not find a willing off-take partner. Investing isn't about trying to choose which company has the biggest resource, it's about where you think you can make the most money.
I disagree that the share price won't be able to get back to $1.75-$2.00, which is what it was at 12 months ago. It may take 12-24 months, but if funding can be found for the project and 2mtpa can be achieved, a market capitalisation of $210m ($1.75 per share) is certainly not out of the question. It all obviously depends on how the CAPEX is funded though.
Say 24 months down the track EQX owns 70% of Mayoko and the operation is producing 2mtpa. EQX's share would be 1.4mtpa, clearing $70m p/a. (IO sale price of $90 - $40 OPEX). A scenario like that would easily lend itself to EQX having a market capitalisation of $210m.
The above is also allocating to value to Badondo.
The elephant in the room is of course Exxaro next door and whether they may bid for the company as well.
EQX Price at posting:
57.0¢ Sentiment: Buy Disclosure: Held
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