Want to work through WA1's interesting Luni+ project to...

Want to work through WA1's interesting Luni+ project to understand it's situation and valuation implications, but trying a different approach. Usually I would post under some inflammatory thread heading like 'WA1 vs Lassonde' to fire up the rampers and generate motivation to see it through. I like a HC fight more than feed, really do, but this time I'll try keeping it academic and see where it leads. Partly because this thread has taken my contrarian opinions with good grace, partly because I'm just concerned, not certain what the answer is.

I've never held/shorted WA1, doubt I ever will, and if that sentiment/position ever changes I'll accurately report it. My bias is clearly conservative risk-adverse, and having said WA1 looks potentially over-valued my bias is probably exacerbated to support that initial position. DYOR, my posts are not advice, only for entertainment purposes bla, bla, bla. This will take numerous posts as and when I find time. I don;t mind being challenged or answering questions, but i ask if this thread is not to your liking, just don;t read it instead of spamming it negativity or irrelevant comments. Plenty of other threads to ramp and cheer on... I'll respect yours if you respect mine.

I'm going to start with geology 101, because for all the assumptions Luni is 20Mt @ 2% big and getting bigger i never bothered giving it a close look. Grade is a critical advantage obviously, metallurgical recoveries are critical, supergene oxide ore is the money shot, fresh carbonatite ore might only be marginal even at much higher processing tonnage. Not got to waste any time repeating what you already know, just pointing out what i thinks important.

This slide has it all. Until discrete, high-grade niobium structures are identified in the fresh carb, Luni's MRE will reflect three grade zones of importance. Low-grade oxide laterite (depleted and/or below future cut-off grade... say 1% Nb2O5), high-grade supergene oxide (say 3.5% avg), and low-grade primary fresh carb (say 0.6% ignoring any transitional mix). Do the maths yourselves, taking out the HG supergene from the broader intervals leaves well <1% avg grade in fresh rock.

Practically from a mining, metallurgical and grade cut-off perspective fresh ore is chalk and cheese to supergene. There is no realistic justification to combine these two ore types into a meaningful global MRE imo. A starter mine will have to run on oxide ore, any fresh ore will require 5 times larger bene plant, probably with different float reagents dealing with the carbonate minerals weathered away and absent in oxides. A more selective 0.75% NbO2 fresh rock grade if it exists would be insufficient to justify development, so that possibility remains in the backseat while the oxides either justify a large, long-life development or not.

From assays to date, Luni has a HG supergene blanket approx 1km x 500m x 10m thickness average, or 10Mt @ 3.5% Nb2O5 using 1.7 specific gravity (assuming edges are thinner, lower grade like holes off-section). There's not much lower grade oxide reported above the supergene, which appears to sit hard above the base of oxidation. How much of this supergene is 'transitional' oxidised don;t know, could be a complication but too early to tell. So, if we can't 'blend' oxide and fresh rock (not that you want to at 0.7% grade anyway), and there is a sharp drop off in grade above the supergene blanket from overlying depleted zone... then Luni is not 20Mt atm but a 10Mt deposit.

3.5% grade is fantastic, and more than makes up for lower tonnes in an economic sense, but 10Mt is not world class size and limits LOM desperately needed to extend capex D&A into small annual increments. The deposit is open, and the implication is that it's still very much in the exploration adds value stage of the Lassonde Curve. Continuing thick intersections of high grades, extending laterally into a large MRE is critical to add needed tonnage imo. On the flip side, at only 10Mt and risk the deposit pinches out early, maybe the share price has got ahead of reality?

Of course, with handheld XRF sensitivity for Nb down to 5ppm, and Luni chasing grades of 35,000ppm, the company and punters who know someone, who knows someone, who knows an employee of WA1 would be a couple of months ahead of reported assays. CR brokers would be given the hint needless to say, probably I'm the only one in Perth doesn;t know what assays are coming down the pipe. Certainly WA1's continued share price strength is a strong technical indicator that drilling continues to return good results and expand the HG supergene area. 20Mt @ 3.5% Nb2O5 would provide both the production scale, grade and mine-life to minimise capex, depreciate that capex over >20 years, and thus hit undeniable return metrics.

In summary; maybe too small yet, more good hits needed to hit certain scale tonnage, size potential certainly achievable, continued share price strength indicates market expects expanded drilling to deliver the goods (or market mistakenly thinks that size has already been achieved?).

GLTAH