What if the PEA is not so good after all? The regular contributors on this board have been considering various explanations for Cliff's behaviour about Decar, but since PDAC I have been pondering a different theory.
To recap, some of Cliff's actions in the last year or so have been: withholding information from FPX -- and when arbitratration forced them to hand it over, insisting on a secrecy agreement that it not be disclosed; launching an infill drill program at Decar; publishing an expanded resource estimate; not releasing the PEA in time for PDAC and not having anyone at their PDAC booth who was ready to promote Decar.
We are familar with the usual explanations: that they are manipulating the price downward, playing hardball games with the hope of buying the remaining shares of FPX at fire-sale prices in early 2014, etc.
Recently I've realized that there is an alternate explanation. Maybe the economics of Decar really aren't that good. Maybe Cliffs optioned Decar in 2009, hoping that the price of nickel would rebound to the $20 range, but now that the price has fallen well below $8, the project economics for Decar are marginal, especially if the PEA uses a very conservative long term nickel price, such as $6.50. Maybe Cliffs did the drilling last summer in the hopes of finding a high grade core (0.25% or better) to use as a starter pit, but didn't find one. Maybe they increased the resource estimate hoping that a bigger operation with higher tons-per-day would be more economic, but doing so pushed the capex above $1 billion. Maybe the I.R.R. has ended up in the range of 15% or so, which (combined with a high capex) means poison in today's cash-conserving environment for major mining companies. Maybe within Cliffs there is one team of engineers who like the awaruite concept, for the same reasons that FPX likes it, but now that Cliffs is going through difficult times, that team has drawn the short straw, and the senior management at Cliffs has given Decar the thumbs-down. Maybe Cliffs was silent about Decar at PDAC, because its senior management now consider the project to be an embarrassment, that they want to bury.
Well, we'll all know, soon enough.