RE:QuestionBailey2,
I concur with you regarding the inflation adjusted costs required for CAPEX and operating costs compared to the 2007 PEA and the numbers you cited
There are actually a few unknowns that could offset some of the increased costs compared to the older historic estimates.
For others reading these post, here is the weblink for the 2007 Adanac PEA:
https://secure.kaiserresearch.com/i/jk/tr16/TRAUA20071201.pdf And here is the weblink for the last resource estimate completed by Adanac in 2009 :
https://globaldrillingsolutions.ca/wp-content/uploads/2017/06/Global-Drilling-Resource-Update-2009.pdf It would be quite logical to assume a significant increase in the initial CAPEX of C$640 million for a mill, tailings facilities, rolling stock etc .... question is how much higher ? Would a smaller initial mill make sense, with capacity scalability built into the mill ? What would the starter pit grade be ?
The PEA was completed in 2007, yet the 2009 resource update increased the size of the deposit significantly, so what are the economics of Ruby Creek using the 2009 resource estimate ?
The numbers you cited also included a molybdenum price of approximately US$14.00 / lb as being quite economical from 2016 onwards. Operating costs were estimated to be around $8.11 / lb if I recall.
On page 107 of the PEA there is some indication that the actual recovery rate of moly could be up to 20% higher than the assay results indicate, based on some early 1970's bulk sample testing ..... as a result, the 2007 PEA also includes the impact of a 15% increase in grade in the Ruby Creek deposit.
Also, the last holes that were drilled by Adanac in 2008 on the westernmost edge of the known deposit showed some of the highest grade intercepts yet drilled and leaves the deposit open for further increase in size.
There is also about a $3.50 per tonne reduction in operating costs if the power grid is run to the project, instead of using generators and deisel for the first 5 years as was planned by Adanac in their estimated cost structure.
We should get a better indication in the next couple months, as Mine Development Associates completes the new 43-101 compliant resource estimate, at which point, Stuhini management will be able to discuss the prospects of the Ruby Creek moly deposit, as the new report will be the company's own commissioned work.
Who knows, MDA could return a smaller resource estimate than the 2009 resource estimate of approximately 462 million pounds. Remains to be seen ... we'll know soon enough.
What will be interesting to see is a new PEA, which would most likely be the next step in Stuhini mg't plans after they release the new resource estimate currently being completed by MDA. With an updated PEA, we'll know what price of molybdenum makes Ruby Creek a viable mine. I suspect it could be anywhere between US$15 - $25 / lb, could be a bit lower, could be somewhat higher ....
I believe this is one of the best spec plays out there, as there is already a known, well defined resource that is basically fully permitted. Spending the money to get updated numbers in today's moly price environment makes total sense for Stuhini.
Risk / reward on Stuhini seems very good ..... as long as moly prices hold steady here and increase further in 2022.
GLTA !
;-)