SHERLOCK BAY NICKEL PROJECT BFS

Well, as promised , here we go Sutto . I’m leading with my chin,yet again .
Let me make some self-declarations up-front .I am directing this post to you as;
you have held SBR shares for many years and understand the arguably unlucky, unfruitful journey that we have travelled  ( thus far ); you are significant shareholder ( last time I looked); you are prepared to take the time , and make the effort , to talk to the company ; and you have been prepared to report and share information back fearlessly .No doubt you will critique this material and check it out .
Other declarations ; I hold both SBR and MLS ( lengthy period ) and therefore have a keen interest in their success .I do not know Sutto and I have never had any contact with Sutto , other than via HC posts .
That all being said I am looking to you to have a read of this post, check it out , and challenge or validate any aspect of the content ....as you see fit .
BACKGROUND
SBR holds some great tenements in Namibia with several/many showing incredible potential eg  Guchab; Guchab Sth ; Kaskara et al for a range of metals including copper . zinc, lead and vanadium .
Arguably , SBR has come exciting close to hitting a honey-pot in Namibia ( and still could )but for lack of capital , a downturn in the metals markets for several years  and a  lengthy wait for the surety associated with tenement renewals .
SBR activities are still hampered by a lack of exploration funding .
SBR secured ( last week ) a 70% share in 2 Pilbara based exploration licences and a mining lease located on the Sholl Shear Line.
WHAT IS DIFFERENT?
I am loathe to say “ it is different this time “ , because it is up to the SBR BOD and management  to demonstrate that through their timely actions .However , the new ( to SBR )Sherlock Bay Nickel Project ( SBP) is different in that SBR  , during my tenure as a shareholder , has been solely in exploration mode .
From the research that I have taken thus far, the SBP is a SHOVEL READY PROJECT. In 2004, the Sherlock Bay Nickel Company had completed sufficient exploration to produce a 2004 compliant JORC , and I have located the summary of the Bankable Feasibility Study released publicly on 16 September , 2004 , located at the link below :
https://www.asx.com.au/asxpdf/20040916/pdf/3mvvb65flf62d.pdf
Some of the key points from the documents that I have located, including the above study are
:
The 2004 JORC resource is:
25.4 Mt @ 0.4% Ni; 0.09 % Cu ; and 0.01% Co for
101,255 t of Ni
22,425 t of Cu and
4360 t of Co .
My calculator indicates that to be  a 2004 JORC $2.436 Bn ($A) of contained metal (current prices)
However the total estimated resource is > 33Mt
The deposit is open along strike, and at depth, with 15Km of shear zone untested ( ie only 1.5-1.8 Km explored). Plus, “there is potential for massive nickel sulphides along the extensive ultramafic boundaries.”
Mineralisation is up to 30 wide, and has been drilled to 500m.
Initial operations can be low cost open-cut.
The rest of deposit is amenable to low cost bulk underground mining.
The deposit has strong geological and grade continuity.
Over 36000 m of drilling has been completed (and paid for!!).
The deposit has been reported as “low capital cost; short lead times (6 months to get in to production ) ; and low opex .”
The ore has already been sampled and tested, and is SIMILAR TO Mt Sholl ore that is processed @ Radio Hill ( owned by Artemis) . ie it is from the same shear zone . This may present us with a low/no CAPEX option ???? ( purely my non-qualified thoughts ).
Environmental Assessment(s), Native Title Agreement and 2004 BFS all completed  ( 2004 BASE CASE Project 4 year cash surplus of $227.5 m.)
SO , WHAT HAPPENED ?
I’m not sure .Perhaps it was the fluctuations in metal prices; perhaps it was Clive got interested in iron ore ..... maybe someone else will know ?
HOW DO THE FIGURES STACK UP NOW?
Well, in 2004 the prices for the respective metals in USD cf now were:
Nickel    2004 ~ $US 7 lb CF   2018 $US 6.14
Copper  2004 ~$US 1.50 lb  CF   2018 $US 3.19
Cobalt 2004 ~$US 14 lb CF   2018 $US 36.40

VALUATION
Beauty is always in theof the beholder!
BASED ON IN-GROUND RESOURCE :
$ 2.436 Bn / 300M shares ( I actually think it’s more like 250m)/20 ( valuing in ground resource @ 5%  of above mined /refined value  ie 95%discount factor ) x 70% share = 28.42c

CASH FLOW VALUATION ( based on 2004 BFS figures)
Net Cash flow over 4 years ( $ 227.5 )/4 (yrs) = $56.8m pa / 300m ( shares) =$0.189 x 8 ( P/E ratio) x 70% = $ 1.06 .
Of course, both of the above calculations are back of the envelope calculations .

BFS BASE CASE REVENUE
If we take the BFS base case of initial production of 2Mtpa and apply the current metals prices , in $A
we get : 2Mt @ 0.53% Ni ; 0.1 % Copper and 0.01% Cobalt for 10600 t of Ni ; 2000 t of Cu ;and 200 t of Co .
Ni 10600 x $17192 = $A 182,235,200
Cu   2000 x   $8932   = $A 17,864,000
Co    200  x  $ 101920 =$A 20,384,000
Total Revenue: $ 220,483,200 pa base case  ( 70% SBR )
Now, for the sake of debate , let’s assume that operating costs are ~ 50% of Total Revenue ( and I have discovered separate justification for that assumption ) then we have a significant net Profit , low risk ., and I would think a very rapid project cost repayment period with a very high IRR .
Net profit pa $110m/ 300m shares = 37c p.share x 8 ( p/e ratio)x 70% = $2.05 .
SUMMARY
That’s my opening shot Sutto. Can you tell me if someone is spiking my medical marijuana with THC ?
Whatever way one would choose to estimate the value of the project , it is either worth nothing , or much more than 2c ( leave aside all of the other prospects ).
I guess if the Directors start buying that would be a massive sign of confidence in , and their intent to develop , the project .


I guess it’s over to the BOD
Review the project asap .
Clearly , and unequivocally , tell the market that it is committed to proceeding  with this project asap .
Produce a 2012 compliant JORC asap .
Market the Project .
Generate some off-take partners/interest.
Raise some $$$$$
LET’S SEE THE PROJECT PUT INTO ACTION ---OVER TO YOU BOD –LOOKING FOR LEADERSHIP
HERE!!
Sutto , is there any reason why you and I can’t be standing on-site this time next year with chrome plated shovels turning the first soil????
And, I haven’t even mentioned the potential for conglomerate gold or given any value to the Namibian holdings .
Over to you Sutto ....give it your best shot!!
Best wishes
Q
ALWAYS DYOR