RE:RE:I'm back - sounds like some good debateJDN,
The issue with the resource is not at all related to drill spacing, it is just defining the envelope which means quite wide spaced holes will likely do the trick (ie every 100m or maybe even 200m). In addition, AGG will require some geotech drilling anyway, so this resource work can fit in with that. I think circa $500k, certainly less than $1m in terms of cost. The key point is the ozs are there, it isnt an issue on that but just classification. I'd say it is very low risk that the ozs dont come back, not risk free but very low risk.
Personally I think the additional strike at site means Kobabda is 5moz anyway so number of ozs just isnt an issue in my view. There is a lot of gold at both Foroko North and Gosso and to date there is only 180koz inferred over the two areas (nothing at Gosso). To me those look like million oz plus proposition.
The milling circuit is the great thing about this orebody, it is very low risk and straight forward. 100% confident it will work. Fines rejection has been confirmed beyond a doubt and this is key. There is downside risk on the assumed recovery of 85% but that is it. I think 80% is a bad case and 75% a very bad case. Relative to other projects and flowsheets, commisioning and capex risk is very very low.
Grade is always an issue in a nuggety orebody. Sampling issues mean that estimated grade will almostly certainly be lower than true grades. This was shown previously pretty clearly. You can't bank on higher grades but in my view they will be there. As I said previously though, select areas will underperform on grade from time to time and some areas will massively outperform. This deposit is not highly nuggety, but it is consistently coarse. There have been no massive grade hits in drilling to date but the fact illegals found a huge nugget in the middle of the resource shows big nuggets are there. So in conclusion, I think production will outperfom and costs will be lower than expected, 20% better is very likely and it could be far far better than that.
Also the fact the strike extends and existence of Gosso means the real mine plan will likely be more like years 1 and 2 for much longer so the low costs of those years are likely to be extended.
I've said it again and again but this thing is incredible becasue you can get a big resource into production with low cash costs very cheaply and with low risk. It stands out aganst everything else I see. And of course the valuation reflects nothing at all.
I cant understand why people are being critical of the new management - I think they have done really well on a shoe strong budget to get the feasibility work done so far and PEA published. They have also dealt with some historical issues effectively which for me is a major plus.
Only problem for me is the shareprice, if it remains so depressed and undervalued, getting the project moving will be harder. Of course, if we get a big run they delivery is a done deal. Irrespective of the market, I can't see how the project isnt worth $30m+ in a trade sale either.
Someone I really respect said to me about another entity "we don't care how the venture values us because there are other ways to monetise our project and that market is just not being efficient at all - we have created value and shareholders will see this even if the venture ignores it". I think AGG is like this too now.