RE:PLS just got a whole lot more valuable to a Producer...Re: inferred, from Raymond James report: "Inferred Should Not Be of Concern. Given the companys strategy of defining a large footprint quickly, the steeply-dipping orientation and mid-range depth of the deposit (high-grade starting at ~250-300 m vertical depth), and the introduction of wedge-like directional drilling only recently, it should come as no surprise that spacing between pierce-points is predominantly ~50 m, sufficient only to define an Inferred category resource. This was also well-telegraphed by NexGen to the market. We do not believe this should be of concern to investors; the pelitic gneiss (host rock) stratigraphy has proven very consistent over Arrows strike length, as have the uranium grades, thicknesses and alteration within drill holes across the deposit. This is best evidenced by the consistency of the seven holes defining the heart of the A2 Sub-zone. While it is typical for uranium deposits in the Basin to pinch and swell down-dip and along-strike, the variation along this high-grade A2 Sub-zone core appears modest. Indeed, some infill holes drilled this year, as aforementioned, are stronger than those included in the resource. It is therefore to us very possible that contained metal will grow significantly upon conversion to the Indicated category, as was the case with McArthur where a 260 Mlbs resource was defined from surface (only to nearly triple once underground)."
quakes99 wrote: Well, big congrats to NexGen's Technical Team on getting it's Maiden Resource out much earlier than expected, in time for PDAC. This is a great day for NexGen and Fission shareholders alike! The ingredients needed for the envisioned Patterson Lake Uranium Mining District are now falling into place... setting it up to be the next Key Lake - McArthur River tandem play... history repeating itself on the SW side of the Athabasca Basin. Fission shareholders should be ecstatic, imho. ;-)
I'm still reading through the NXE news release, but so far the key points to cover are:
1. The 201.9M lbs is all Inferred (low confidence) resource that assumes continuity underground between widely-spaced holes. NexGen will be spending the next 2-3 years going through the process that PLS has been engaged in over the past 3 years - defining a large Indicated Resource that becomes the Proven U3O8 resource needed to do a Feasibility Study that accurately defines the resource, size and grade, and the mine economics to determine the associated CAPEX, OPEX and profit margin for a new Arrow mine project. Remember that size and grade define the Deposit.... while CAPEX, OPEX and Cash Flow define the mine's overall economic value - its money-printing ability.
2. To convert Inferred to Indicated (and eventually Proven) will require a large number of Infill holes to be drilled, both from the surface and likely from underground surveys as was done for McArthur River. An Arrow NI 43-101 Preliminary Economic Assessment is schedule for completion in just under 2 years time, though I suspect that timeline may be pushed back in order to allow more time to better capture all the resource that continues to be added this Winter. Whether or not that underground continuity between widely-spaced holes can be proven has yet to be seen. That will be key to understanding the actual mineable resource before developing it into production.
3. The NexGen MRE was done by RPA... so all the efforts to discredit RPA's work on the PLS Preliminary Economic Assessment can now be thrown out the window. RPA appears to have used the same U3O8 pricing at US$65/lb with the same underground cut-off grade of 0.25%.
4. The Patterson Lake Uranium District has now achieved likely over 400M lbs, probably closer to 500M once the PLS resource estimate is upsized and UEX's Shea Creek is added in. That massively reduces the risk for PLS as it essentially guarantees that PLS will become a producing mine. That sets up PLS and Arrow to become the next Key Lake and McArthur River sequence... Key Lake was a large shallow open-pit deposit that yielded a large Mill to process the Key Lake ore... then once Key Lake was exhausted it became the McArthur River Mill to handle that high-grade feed at depths similar to Arrow. History will likely repeat itself.
5. With another to-be-proven 200M lbs of ore to process adjacent to PLS, that means the CAPEX for a mill will likely be shared rather than exclusively paid for by a PLS developer/producer. That will significantly reduce the CAPEX attributed to PLS and dramatically raise it's NPV and profit margin. PLS just got a whole lot more valuable!
The overall district dynamics will likely play out much as PLS was envisioned on its own. If both PLS and Arrow were considered one project then its development cycle would be:
a. Complete the PFS and FS studies for Open-Pit mine at PLS to get it into production ASAP and build a large Mill in the PLS district.
b. Continue proving up Arrow towards a PEA, PFS and FS following a few years later than PLS.
c. Take PLS into production as the highly profitable Open Pit that will be the starter project for the District... as the high-grade open-pit portion of PLS is mined out after a few years then begin the high-grade extraction at Arrow to keep the mill running at optimal grade.
d. Continue mining both PLS and Arrow, with Shea Creek as well, over the next couple of decades (depending on the production capability of the mine).
This truly is a great day for both Fission and NexGen shareholders. The future for both projects just got a whole lot brighter! Now we need a rising U price to put the icing on the celebration cake! ;-)
Good luck to all the longs invested in the Patterson Lake Uranium District!