RE: Eye on the prize... The market can be irrational at times in the short term but the current price is reflective of the overall sentiment by experts, amateurs, and insiders taking into account the known risks and rewards presently. I thought about this stock some more recently. On the Niogold website there is a tremendous research report written by Northern Securities that is of extremely high quality and provides additional insight that is likely not known to the regular Joe non-mining public.
First, the initial strip ratio (amount of waste rock mined relative to actual ore mined) is some atrocious number close to 10:1! And unbelievable as it might be that high number actually includes pre-stripping too otherwise God knows what the number would have been ... 15:1, 20:1??!! On the positive side the ore is also non-refractory and of above average grade (double) of other large scale open pit deposits with very high recovery rates exceeding 95% and these are the only things that are possibly saving the project from the high strip ratio.
The other thing the report indicated was they are estimating the uncapped grade of the resource to be 2.4g/t as opposed to 1.6g/t capped. That is a huge 50% increase and quite unusual to see in an open pit operation.
So the bottom line comes down to this in layman's terms. Northern estimates mining cost to move one tonne of ore to be around $2 which is relatively cheap. Other opit operations are generally in the $1.50-$2 range. But if the strip ratio does indeed turn out to be 10:1 then in reality to mine one actual tonne of ore requires you to also move ten tonnes of waste rock, so the true cost to mine one tonne of ore including waste rock is $22 (i.e. 11 total tonnes x $2). Including processing and G&A and total cost just exceeds $30/t which is abnormally high and in 95% of cases would instantly be deemed to be uneconomic for low grade open pit operations. Even a $20/t cost at say 1g/t grade would be very marginal.
But what could salvage the situation is the grade. If it can indeed be done at the assumed 2.4g/t then it would be extremely profitable (i.e. estimate of low $400's/oz cash cost). Even at above industry average grade of 1.6g/t the $30s/t cost is still high and marginal economics but likely similar to $20/t at 1g/t (i.e. $650/oz cash cost).
So the key here is to continue defining more ounces, upgrade quality of the resource, potentially lower the strip ratio to give them the best chance of success. Of course there are many assumptions that might or might not turn out to be correct such as the expected strip ratio or uncapped grade. But never assume the market is blind or stupid and as always in the junior gold mining sector it is never just about number of ounces or the grade but the amount of economically profitable ounces that determines overall value. DYODD and GLTA.