Its good to be conservative, but it can miss the big picture (which the current share price appears to be doing). The 40 year mine life quoted is using proven and probable reserves and is now an outdated figure as either 14 or around 70 is now sensible given the expansion to 3.9mt is happening.
50.6MT mined at 1.3mt/yr is 38.9. Because one of these years is split into a start year and an end year, a 40 year mine life is quoted. Expansion is occurring so the 14 year mine life is really the applicable figure. This is 50.6/3.9 = 13. The same split year effect increases this to a 14 year mine life.
With limited funds, there was simply no point in doing all the drilling now to get the full 263mt (or there abouts) into proved and probable status. If the mine life was recalculated using resource figures, its was a 203 year mine life with stage 1 and that is reduced to 68 years with the upgrade to 3.9mt/yr.
My guess is that in addition to exploring a high-purity manganese plant, cash flow funded expansion beyond 3.9mt will occur. This will lower the mine life further, but you don't need the mine life to be as long as 68 years (if calculated on resource figures).
E25 Price at posting:
$1.85 Sentiment: Buy Disclosure: Held
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