SDRG UpdateSpent some time meeting with Marc and some key SDRG players up in Toronto at PDAC this week. With the stock acting so poorly these days, I figured I'd give an update on what I learned. So many great things going on at the moment.
1. The Dadi 43-101 report had 45 million Ag equivalent ounces, including a large 51% of actual silver. This is an initial report, which is quite impressive given that only six holes have been drilled (plus lots of trenches and tunnels). The grades are much higher than Bairen Daba, the largest silver mine in China. Bairen Daba is right next to Dadi, and also run by Shengda, the largest silver miner in China and a 52% owner of Sino-Top. I met both Dr. Liu, Sino-Top's head geologist, and David Wahl, the geologist that wrote the Dadi 43-101 and will also be writing the Laopondao 43-101 this spring. Both were extremely excited about Dadi, and Mr. Wahl stated his belief that it could certainly be as big as Bairen Daba. Since his resume is as long and deep as anyone in the business, I take this commentary as a major positive. He envisions building a huge mill between Dadi, Laopondao, and Erbahuo and trucking the ore from the three mines to it. This mill could be bigger than Bairen Daba, and thus could be a huge silver/lead/zinc producer. Costs should be well below industry averages for numerous reasons, starting from its location in China.
2. The plan is to send Mr. Wahl to Laopondao this spring when the weather improves, and to write the 43-101. Since it took just three months to complete the Dadi 43-101, it probably could get done this summer by my estimate.
3. The remaining Dadi results from 2009 were incorporated into the 43-101, so no more are left to be published. However, additional Laopondao results from 2009 are still being tabulated for public release as soon as possible.
4. A MAJOR drilling program is planned for Dadi and Laopondao this spring/summer/fall, which has been fully funded already by the announced sales of Liangdi and Sanhanabao. The completion of this program, combined with the Dadi and soon-to-be-published Laopondao 43-101s, could pave the way for some kind of Pre-Feasibility Study late this year and a production decision in 2011, the way I read it.
5. Marc and David Wahl left yesterday for Mexico, with a huge slate of things to get done. One of them is to get Mr. Wahl's input into the proposed production operation, which is planned to commence roughly three months after receipt of the environmental permit. All paperwork for that permit has been submitted, and thus it could be issued at any time. I believe they will also be meeting with representatives of SEMERNAT, the Mexican mining bureau, and hopefully will have some better info about the potential timing. I've seen projections of cost, which come out to roughly $1.00/Ag oz. after by product credits, so cash flow could become huge, especially given that so much mineable ore has been stacked as tunnels have been built down the ramps.
6. Working on some other things, but they obviously couldn't tell me what. We'll see.
Hope this helps. SDRG has spent the past two years of stock market hell dramatically improving its future outlook while only minimally diluting the stock, and the current valuation of roughly
.70/Ag equivalent ounce is roughly in line with a large group of PM juniors that I follow.
This group (including SDRG) traded at $4.00-$7.00/oz at the peak of the TSX-V three years ago, and will be valued there again at some point following the inevitable melt-up of gold and silver prices. Only this time around, SDRG will have dramatically more ounces, better partners, and cash flow.
yoyo