To put some of this talk about the BS complex restart occurring...

To put some of this talk about the BS complex restart occurring when the PON was stable above US$8/lb into context, PH used it as a bullet on Slide 5 of the May, 2020 corporate update presentation. "...consistently >US$8/lb" (06/05/20).

Much better granularity on this issue can be found on p.8 of the 2020 Annual Financial Report (released 24/09/20):

"Over this period [H2-CY2019] the Company undertook a review of the Black Swan Restart Study. In December 2019 the management team determined that the project required a sustained nickel price greater than US$7.50/lb and an A$/US$ of 0.67 to be economically viable, concluding that the project would benefit from further high-grade ore feed to reduce unit costs and improve the overall economics. This conclusion resulted in a renewed focus on exploration for high grade nickel and specifically a down-hole electromagnetic (“DHEM”) survey being conducted via the Black Swan disseminated extension hole drilled during the prior financial year. A large EM anomaly, called the Golden Swan anomaly, consistent with a massive sulphide EM response was detected."

The late-2019 review, 2-3 months prior to PH's arrival, resulted in an economic restart hurdle of >AU$11.20/lb (i.e. US$7.50/lb / 0.67 Fx), or AU$24,700/t. It represented an effective increase of AU$1/lb from the previous hurdle of AU$10.13/lb (i.e. 2018 DFS: US$7.50/lb / 0.76 Fx). All this still being based on the 2018 DFS production metrics, before GS was a thing.

Today's PON, in AUD terms, is AU$10.67/lb. (i.e. US$8.30/lb / 0.7775 Fx, as I type this note). In AUD terms, it has not yet met that hurdle (thanks to the appreciating Aussie dollar). It needs to hit that target first, then consistently remain above it.


This is all largely irrelevant, however, because management also expressed a desire to find more high-grade ore feed, which would reduce unit costs and improve the overall economics of the project. Fast-forward to today and the (then) mentioned GS anomaly has been upgraded to a mineralisation, with dev drive drilling (hopefully) close to half-way to the planned drilling platform zone.

Management are progressing the strategy laid out in the 2020 Annual Report. PH and the team are staying true to their word.

It's unlikely the dev drive will be completed by the mid-Feb conference, let alone any GS confirmation drilling. A restart announcement at that time is highly unlikely, imo, but there should hopefully be enough encouraging news to maintain the positive momentum of interest leading into the months ahead.

We're all anticipating GS to materially improve the economics of the BS complex and lower the restart hurdle, but they need to drill it out first or at least drill out enough of it to firm-up any accelerated restart while numbers remain below the 2018 DFS "knowns".

It will happen, but in a rational and co-ordinated way. It certainly won't be influenced by a chat group.