RE: Feasibility costs?Feasibility is still quite a ways off imo - at an absolute minimum, the 2013 season.
This is how I personally foresee PGD playing out just from what we know right now. This is just a forecast I've kind of been keeping in the back of my mind, so I'm open to comments/criticisms/etc.
2011
- Probable mini-bulk sampling of CH-28, CH-31, CH-44 + any other highly prospective kimberlites, TBD soon.
- Bulk sampling of CH-6 and CH-7.
- Continued discovery of other kimberlites.
2012
- Mini-bulk sampling of prospective kimberlites from the 2011 season.
- Bulk sampling of those kimberlites that were mini-bulk sampled in 2011.
- CH-6 and CH-7 likely are not going to be enough on their own to justify the immense capex required for the Chidliak project. Further work will be done on both of them to delineate their resources, perhaps including a NI compliant technical report.
- Of course, exploration will continue in this year as well.
2013
- With some combination of skill and luck, kimberlites that are bulk sampled in 2012 will prove economic enough to justify a pre-feasibility study, which could take place early in the year. These studies tend to take several months to complete.
- If, after the pre-feasibility study is completed, PGD/BHP do not believe that the project has at that point reached critical mass for the consideration of mine construction, then the exploration/sampling/bulk sampling cycle will continue until such a time where it does, and only then will a full feasibility study be undertaken. This could take a year, two years, or more... who knows?
So in my mind, we're at least 3 years away from feasibility. Exploration costs were something in the order of $13.5 million in 2010, and PGD has given guidance that they expect 2011 to be similar. Yearly costs will only increase from this point on, as activities like full bulk sampling are expensive!! We're talking thousands of tonnes of material, which will have to be processed on site via some constructed lab - transportation costs to the SRK lab would likely be prohibitive. Feasibility studies in themselves are very expensive in terms of pure labour hours - although BHP would certainly realize cost efficiencies due to their expertise and economy of scale, there would still be a considerable cost associated.
My first guess at the cost of BHP's funding to feasibility would be therefore be around 50-60 million. I'm no expert - this is just a quick and dirty guess made using the above assumptions.
Why, one might ask, would they opt to spend that much money when 7% of PGD is only worth about 20 million right now? Well...
1) They wouldn't be able to purchase that many shares without moving the market VERY SIGNIFICANTLY.
2) Spending 60m for 7% right now implies a total market value for PGD of 857m - if they think that the ultimate project value of PGD will be higher than that, then it's a bargain.
3) Marketing rights for 3 years have enormous value if they believe in the project, although I cannot place a dollar value on it I would think that BHP is salivating a little.