Changing Mentality for Catalysts The world of juniors has changed in the last 12-15 months so that unless you are actually producing, nothing you say now has more than a temporary effect on the sp. Look at someone else like Torex who just announced 4.8m ozs at 2.79 g/t and has seen no effect on its sp to-date. Or look at recent drill results from Galway, which include some bonanza-grades and quality/thick veins...market didn't even blink. Pre-Greece/Euromess you would have seen a reasonable to big surge that would have then sustained about 60%-70% of the upside during subsequent consolidation before readying for the next leg up. Its like if you are not actually producing, anything of any note is immediately discounted unless it is so spectacular that it causes a total re-set of fundamentals.
As for VTR, there are plenty of options to change the IRR/Payback if they want to consider them, and many other posters have commented already on things like:
- smaller starter pit in the higher-grade south area, that they can then use cashflow to fund upgrades to production capacity for the main pit. If grades are >2 g/t then they could go with production throughput of half the plan and still produce the same amount of ozs.
- stockpile the lower grade "halo mineralisation" ore (avg 0.8 g/t) and focus on the "mineralised bands" which average 1.4 g/t
- go with just one 6m tpa circuit while they fine tune operations and recoveries, and once cashflow allows add the other circuit - means producing only 170k ozs a year for first 1-2 years, but would probably cut initial capex by at least 1/3rd
- go with a smaller pit that is also shallower and focus just on the higher-quality central core - would reduce strip ratio and associated cost significantly with downside being shorter life of mine, but that also does not factor in the potential for additional feed from other prospects in the immediate area. If gold price continues to rise and they improve recoveries, then in later years they can widen/deepen the pit and still make a good go of it.
Then there are the metrics used, which can change the outcome significantly. The price of gold could go down, but it could also stay at >$1500 for the next 10 years. They could work a little harder on recoveries and get them up to low/mid 90's. Maybe they decide to lease their fleet instead of buying. Or maybe like some other companies have done they pick up a used mill and relocate it instead of buying brand new. Any PFS is by nature going to be conservative, so while VTR is still years away from production, better to short-sell now and have room to improve than over-promise and ultimately under-deliver. I can think of lots of those situations where people got sucked in and spit out, eg. Jaguar, Aura, Great Basin, Yukon-Nevada, etc., etc. I'll take the conservative estimate and trust that it is just the starting point from which they will improve.
I'm out of them for the time being so am not pumping, but if you want to see how theory and reality can be very different go check out Rio Alto. Avg resource grade is something like 0.69 g/t Au and yet their actual production grades have been averaging about 1.6 g/t. They have focused on higher-quality areas of their property in order to generate higher cashflow to fund gradual improvements. They started out on the cheap with a heap leach operation sized for maybe 60k ozs in year 1 and just keep using cashflow to fund production upgrades that could/should see them hit 180k ozs after only 1.5 years in production. They have the advantage of an oxide cap so they can get away with much cheaper heap leach operation and so I'm not comparing capex at all but rather highlighting the g/t story and how they have been able to easily surpass expectations by means of astute mine planning.
As for the sp of VTR, if it continues to work to the Flag chart pattern it seems to be locked into then I hate to say it but somewhere around 60 cents looks like the next bottom before a probable bounce back up to about $1.10. That would take it to the topline of the price channel it has been working for the last year. I want to be wrong just because I would rather see it go up, but as someone else just posted about how a year ago everyone was wishing they could have been in at 70-90 cents, these prices are comparable with a much better fundamental story to boot, so if it does hit 60 cents I'll load up what little truck I have left in dry powder and pour it into VTR.
eebler