What can we expect from M.O.R.E.?Reading through the DFS I came...

What can we expect from M.O.R.E.?

Reading through the DFS I came across an interesting section - 18.2.16 Shell Geometry and the Effect of Inferred Mineralisation.

"Shell Geometry" is the shape of the pit, designed to extract the maximum amount of ore at minimum cost. Included inside the shell are both Indicated and Inferred resources. Now, Inferred is at a lower level of confidence than Indicated. So, for the purposes of the DFS, Inferred resources were ignored completely; in other words, treated as waste.

What happens if the Inferred resources became Indicated, due to the ongoing drilling under the M.O.R.E. program, without changing the design of the shell? From page 158 of the DFS: "Inferred mineralisation already within the Indicated Only optimal shell. Conversion of this material into Indicated classification would immediately increases the Shell 36 ore inventory without any increase in shell size. This additional material amounts to approximately 16.4Mt at 440ppm U3O8, or an additional 8% of ore. This is effectively transferring material previously classified as waste into ore which results in the strip ratio of Shell 36 decreasing by approximately 9%."

Further increases can be gained if the shell is expanded to include more of the Inferred mineralisation outside the shell. From page 158: "Inferred mineralisation outside of the Indicated Only shell. This equates to approximately 19.8Mt at 444ppm U3O8. This material is spread across the two zones at depth, with an easily identifiable portion to the north of Zone 1."

Indeed, by increasing the shell we can include further Indicated resources that was considered sub-economic when the Inferred was disregarded. From page 158: "Indicated mineralisation outside of the Indicated Only shell. This mineralisation is determined to be sub-economic for the Indicated only optimisation, but when included with the Inferred mineralisation is then captured by the Best Case shell. Consequently this mineralisation is of lower grade, being approximately 13.0Mt at 363ppm U3O8."

Therefore there is clearly the potential to increase the resource by the upgrading of Inferred to Indicated under the M.O.R.E. program. How much the upgrade depends upon how the design of the shell is increased as well, to capture more of the ore. We can get an estimate of what this might be from page 154: "Inclusion of Zone 1 and Zone 2 Inferred mineralisation adds considerably to the ore tonnes (approximately 24%). However, the strip ratio only increases by 2%, indicating that a considerable proportion of the Inferred material already lies within the optimal shell on the "Indicated Only" optimisation. The inclusion of Inferred mineralisation in Zone 1 and Zone 2 pits increases NPV by 13%. This is despite an ore inventory increase of ~24%. This is because the additional ore generated extends the mine life beyond 15 years and as such is more heavily discounted. In addition the ore is subject to a higher incremental strip." Additionally, from page 158: "This would increase the life of the mine in excess of 3 years, generating a total life (excluding prestrip) of some 17 years."

Finally, a caveat, aka weasel words. From page 154: "Note that these assessments that contain Inferred Mineral Resources are preliminary in nature. They are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as Mineral Reserves. There is no certainty that this preliminary assessment would be realised."

So, if the M.O.R.E. program converts enough Inferred to Indicated, we can gain an additional 8% of ore and decrease the strip ratio without increasing the size or shape of the pit shell. If even M.O.R.E. Inferred is converted to Indicated outside the current pit shell, then potentially we can gain ~24% to the resource size.