Look at all the drilling intersections from San Jorge. Most of the intersections are around 1% Ni. There are many intersections less than 1% and a few (quite a minority) which are over 1%. The overall resource for San Jorge will probably be around 1% or so, from the results released to date. Therefore, they are going to be shipping 1% Ni ore or thereabouts. The only way they can ship ore significantly more than 1% Ni, say around 2.5% Ni, is if they use some process to upgrade the ore before they ship it. To date AVQ has not said anything about upgrading the ore before the ship it. The consistently say direct shipping of ore and that means just dig it up and ship. Therefore, from the drill results announced to date AVQ are going to be shipping around 1% Ni ore. I am not making this stuff up. Just look at their drill results and come to your own conclusions about what grade the San Jorge mineral resource will come out at. I am not evening taking into account mining dilution, of which there is always some.
In terms of how I have an idea about what nickel grade is needed to make a project work I but together a basic financial model and then flexed the grade to see what Ni grade makes money and what does not. 1% Ni is not going to make money on a direct ship project. The smelters are too far away and the handling and shipping costs will kill it. From the model I put together you need something around 2.5% Ni to even have a hope of making a direct ship nickel laterite operation work. But hey..those are just my thoughts. Anyone can put a simple economic model together. Lots of the information you need, mining costs, shipping costs, etc are available in the public domain. The costs which are publicly available will not be the exact costs but they are probably close enough.
The issue I have with AVQ is they over promise, under deliver, do not seem to have any realistic idea about how long it takes to do studies and build a mining operation and then they destroy shareholder value. All while the MD gets paid nearly around $1M a year. That is the sort of thing that puts people off investing in juniors resource companies and we are all here to encourage people to invest in juniors.
I was interested in these nickel projects a few years ago so I did some research and was looking to invest after they put out their initial resource at Kolosori and then they went and lost the resource. I have just remained interested in the project to see where it ends up. It is just an interesting exercise. From the outside its fascinating to see how they go about running AVQ and their projects.
AVQ Price at posting:
14.0¢ Sentiment: Hold Disclosure: Not Held
