re-posting of great discussionsI have a habit of saving great posts for later review. I think the last two days of discussions are particular good, and I will re-post some great posts here. They are not mine, but the writing of John, Mill, Redmosquitos and so on. All credits go to them. This is intended for people who want to read some great posts in one place.
As most of us know that MR. Nash says to read between the lines. Actually some statements are pretty obvious. So here are some for those who don't have time to read the article.
"developing a long-term relationship, ensuring the lives of the mines for many years to come"
"recent drill results proves the mine is going to have and extended life"
About McWatters "that's just one of several smaller mines we expect to find and develop in the area." In conjunction with the Redstone mine, we're looking at a very viable operation for maybe 10 to 15 years or more."
"As we keep drilling deeper, we keep finding more ore. This area has been very generous to us"
"Liberty reopened Redstone last may and plans on declaring commercial production next month."
Chief Naveau said of Nash: This is the first time I've held the eagle feather with a non-native and that means a lot to our community
I tried to use conservative numbers. Feel free to critique this at will. I got these numbers(mining and processing only) from a mining engineer that has over 30 years of experience. He is actually doing a pre-feasibility study for another company as we speak
This is for an underground operation. Not open pit as the $/tonne of mining will be a lot lower
So lets assume 2% nickel/tonne = 44lbs/tonne.
Lets assume on the conservative side we are getting the minimum 57% of LME.
Lets also assume Nickel will be $15 for the next 2 years.
Lets also assume we will get a conservative 90% for metallurgy recovery.
44lbs Nickel x 90% recovery rate.= 39.6 lbs of nickel
39,6 lbs x $15 nickel= $594/tonne
$594/tonne x 57%= $339/ tonne
$339/tonne - $40/tonne for mining = $299/tonne
$299/tonne - $15/tonne processing. = $284/tonne
$285/tonne - $35/tonne (other) = $250/tonne profit.
So we are looking at $250/tonne x ( number of tonnes of ore).
So lets assume We have 1 million tonnes. We would have an estimate of $250 000 000 profits.
These are great starting points to prove up resources. These 2 holes where roughly at 800 to 1200m. With wedge holes deeper into the ore body.
Lets get these holes into perspective. As the news release states that these are core lengths so these will not give us a true picture with width as of yet.
The holes where to establish mineralization which it did with great success. They have intersected the western margin of the ore that represents the down-dip extension.
The better you can drill an ore body at a right angle the better picture you will have of true width. Most times when other companies state core length people should do more info as it can be misleading. But not in this case as LBE has drilled down the dip of the ore rather than across it. The reason for this is the great length to drill the hole.
I see a few people had questions about INCO reason to abandoned. I know a few have also gave great responses for the reasons. I agree with them. At the time nickel 3 to 5 bucks. Inco wasn’t making money and didn’t see the need to spend on exploring. Other reasons as where discussed previously.
I read a post about 14.2% at .7m. As I explained earlier the holes were more vertical than horizontal and were on the west margin. So people are stating that they are narrow veins. Maybe but they can also have great true widths once more drilling is done.
We now know that this ore body is high grade and continuous. How do we know this? Well, There were several electrical and EM surveying methods for ore body delineation.
The Redstone nickel deposit, mise a la masse measurements established electrical continuity between sulphide mineralization intersected in 2 widely spaced boreholes. These test increased the ore estimates significantly.
As for share price, I find that LBE is growing so fast and has many great cards on the table that I find it hard to come up with a reasonable short term share price. As for long term if 50% of all goals are achieved we will have a premier mid tier mining company.
If your looking to try to estimate EPS. Well to mine underground it costs roughly 30/tonne. But I think in LBE case it will be a little more due to narrow veins and LBE attracted the best narrow vein miners so they have to pay more. This is great as its almost impossible to find quality miners. Especially miners with narrow vein experience. Remember sometimes these miners have to crawl into spaces of .5-1m wide.
So I would estimate about 40/tonne with an average of 3/1 stripping ratio. This means mining the rock and bringing it to surface.It costs another $10-15 for processing
That's GREAT news. But I wouldn't focus on the 14.7% nickel as it's only 0.70 meters thick. Rather I would focus on the 8.5 meters which includes the 14.7% nickel. The 8.5 meters is well over 27 feet thick @ 2.4% nickel or 52.92 lbs per metric tonne. At current prices that's over $1200 per tonne.
Even better, the 4.65 meters (over 15 feet thick0 of 3.62% nickel for a staggering 79.82 lbs per tonne which, at current prices is over $1800 per tonne! THAT'S impressive. Let's see if the good news expands.
The results from the Inco anomaly are great - something we've being waiting for, and so far as much as we could have hoped for. I'm not sure how many more holes will be run, but if the remaining ones are as encouraging, this is the significant resource we have all been hoping for.
The other thing this does for me is further solidify Gary Nash's reputation. Back when there was much "gnashing" of teeth [pardon the pun] over the 10.5% price drop, I suggested that we quit worrying about day by day price changes and instead look at the big picture. I'm not re-posting this to toot my own horn - but because I think its the way this investment should be assessed:
"This company is on the verge of some very significant events. Gary Nash does not say things for the sake of getting a sound bite. When you reread what he emailed to the Swedish investor - take it to the bank - this company is close to significant cash flow. When this happens, it will confirm what many supporters have known for some time. But it is going to come as a surprise to quite a number - right about the time that the TSX is starting to hear about LBE. Cash flow confirmed in financials, financing expansion and exploration from operations. Its Gary Nash's plan being executed and bearing fruit - then watch the new believers jumping on the train - and there won't be any bargain 10.5% discounts - the price goes up when you want to be part of an almost sure thing [pardon the expression SureThing]. That's when the guys that took some risk on the way up find out about the reward part of the risk/reward game.
PS. We should also read between the lines like Gary Nash is prompting us to do. Do you think he's decided to put in the Redstone shaft because he thinks there's worthwhile deep ore - or because he's damned sure. Check his history on spending money foolishly - it won't take long, he doesn't!
I thought when LBE hit $4.80 it was a bit ahead of itself [nickel take-over fever]. Now I feel that the market has not fully reacted to the importance of these most recent results, as this filters through and is assessed, I think LBE has justified breaking into some new share price territory. This company has to be valued as a developing company, risk weighted for its unknown exploration potential - but when you add to this, the actual results from drilling and the short wait until significant cash flow - it becomes very attractive. Just think - maybe another nickel mine, likely a cobalt mine, likely another mill, maybe a hydrometallurgical facility, likely regular additions to the resource base and mine lives - and operating cash flows to reduce or eliminate need for dilutive financing. What's next? TSE listing?