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ESS essential metals limited

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Great summary @w27. As many will know, I'm extremely bullish on...

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Grunta101

1,383 Posts.

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26/11/17

18:29

Post #: 29125940
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Originally posted by w27 ↑

There has been a lot happening lately and I thought I would gather a few facts together and join the dots.
We recently had a placement. Nearly a quarter of this placement was taken up by the directors. I have been in this Company for ten years and I don't recall directors contributing to a placement before. There is no better recommendation that Directors contributing capital!
Then we have the performance rights which have just been approved by the shareholders. There has never been an issue of this type to Directors before. Then look at the hurdles for the issue of the performance rights. By the end of 2018 the company has to achieve the following:
TSR to be greater than 75% of peer group.
Total pollucite resource at Pioneer Dome to exceed 20,000 tonnes.
Profit greater than $10M.
Prove up 10M tonnes of lithium with a grade above 1.2%.
We can assume that the directors are confident that the Company will achieve this. These are very conservative fellows and this is the first time they have done anything like this.
The profit can only come from the pollucite. They have to achieve this in a mine for which approvals are not yet granted and they are still to do drilling to finalise the mine plan. In about half the year they have to remove overburden, extract and at least crush and screen the ore, sell it and ship it. If they can make $10M in that period they should be able to make four or five times that as an annual profit on a continuing operation.
I have been looking at the probable price of pollucite. Presently the main use of caesium ore is the production of caesium formate so this will set the price. I have come to the conclusion that a value of $20,000 a tonne is the lowest price that can be attributed to caesium formate. It could be much higher. I have taken this from various sites offering bulk sales of caesium formate and an analysis of the Cabot web site. Taking the atomic weights of the various elements in the compounds, I have calculated the 17% Cs2O is equivalent to about 13% caesium content for our JORC 10,000 tonne resource. Caesium formate contains about 75% caesium. From that we can calculate that the caesium in the resource is worth about $3,500 a tonne. Sodium formate sells at about $250 a tonne. Formic acid sells at about $300 - $500 a tonne. The process of producing sodium formate will be similar to that to produce caesium formate as they are both alkali metals and on the same vertical column in the periodic table. This leads me to the conclusion that our ore cannot be worth less than $2500 a tonne. It may be very considerably more. How much do we have?
We have a JORC resource of 10,000 tonnes. In an earlier application to extract a "bulk sample", now apparently abandoned, we applied for, and I believe had approved, the extraction of 20,000 tonnes. We have not determined definitively the total extent of this pod. We are currently drilling at Peg 3. This has a 500 length, as opposed to a length of 80 metres at the Sinclair deposit, of very high caesium values in rock chips and soil samples. These samples give values as high as 2.9% Cs2O. Caesium is the most reactive element in the periodic table an you are not expected to have any more than a trace at surface. It should all be leached out at that level. We have another highly prospective site at Peg8 South, which will also be drilled in this campaign. We have another half a dozen sites ranked 5 for caesium which are awaiting further mapping and drilling. We have the caesium. What about demand.
It looks like the current demand for deep oil wells is at present supplied by Cabot, principally. As far as can be determined their mine has been closed for three or four years and is unlikely to re-open. The only other significant supply is Bitka, which only seems to operate intermittently and anyhow is in a very unreliable jurisdiction. There have been two papers published recently which indicate a very large potential new demand for caesium. One is for a new solar cell five times as efficient an the current technology. The other is for the drilling of petroleum wells in shale, which as far as I can find out has not yet been done commercially but the trials indicate yery significant commercial advantages over current drilling muds.
Ten million tonnes of lithium will a mine make, especially at the Dome, where it should be possible to source an idle plant to be modified to process the ore.
We have crystals of columbite at the surface at Per 3. This is a very valuable mineral
Then we have the cobalt currently being drilled at Blair Dome. This is about the highest grades of cobalt in the area.
Nickel prices are now high enough to re-open the Blair mine. The leads appear to be increasing in grade and width at depth. It requires about $1M to re-open the mine to allow drilling below the existing workings to prove up sufficient ore to sink a shaft and re-start the mine. Profits from Pioneer Dome should put the Company in a position to accomplish this.
This is to say nothing about Mavis Lake or gold in the Pilbara.
And the last piece is the appointment of an experienced mining executive as CFO. This is the first person you would appoint if you were building a team for a substantial mining enterprise.
I rest my case

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Great summary @w27. As many will know, I'm extremely bullish on PIO's caesium deposit which looks like it will be significantly upgraded in size from the current JORC of 10, 500t. The value of this deposit is significantly underestimated by most investors and PIO has excellent grades of 15-32% Cs2O just 40-50m below the surface. There is almost a global shortage of caesium with just 2 producing mines worldwide, one is in Zimbabwe and only mined intermittently as it's almost unsafe to mine any further (being under a lake), the other is in Canada and has 120,000t @ 23% Cs20. Caesium is mixed into Caesium Formate brine and sold/rented out as a natural drilling fluid for drilling oil & gas wells. David Crooke has stated proving up/mining the Caesium is their first priority. However, DC has also said publicly that PIO's long game is their lithium discovery and I can understand why....anything above 1.8% is generally considered high grade and a quick look at PIO's results for Pioneer Dome project shows that they've already drilled multiple hits above 2% just 30-50m below surface. They also have a lithium project in Canada, which will be drilled just after Christmas. Hopefully their Golden Ridge cobalt project, which is currently being drilled will bring good short term results also. Plenty of news flow over the next 6 months.

PIO Price at posting: 3.1¢ Sentiment: Buy Disclosure: Held
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