RE:Port and Road and Share Pricebest post on this bullboard ever, and instead of answering back, the longest suffering long on this bullboard can only call it hogwash, and he claims he does serious dd, what a load of bull. Lovecarats nailed it, worth reposting
"Why would PGD ever needed a deep water port? or a road?
Doesn't make sense - as most anything can be brought in by barge.
That is what Newmont did on the Hope Bay/Delores gold project: designed a modular mill that would be shipped on barges - and then, of course, Newmont finally got out. But that plant is working today - and the new owner didn't need a deep-water port or an all-season road.
As for this road, let's get real.
Let's see how another diamond company benefitted:
When Stornoway was looking at construction of Renard (post feasibility but pre-financing) they talked with Quebec government run by Charais who supported Plan du Nord. When the Conservatives were booted out by PQ's the road was dropped even though partly constructed.
SWY had to get PQ gov't to loan them $77M for construction of a single lane all-weather road (with pullouts) as it wasn't going to happen! I believe SWY would have had to build 25%-30% of the remaining road anyway so the bottom line is that SWY doled out an additional (to FS cost estimate) roughly $50M to get their all-season road. That's the way that worked.
But SWY ended up with a road access which assisted not only construction but also operations although the latter benefits may not necessarily be significant in the big picture IMO. Operationally Renard benefits from the all-weather road through delivery of bulk products such as diesel and natural gas, cement and explosives and milling supplies. In all likelihood some groceries are also delivered via the 800+ km route from Quebec City. However, all personnel still
fly in/out as with all other Canadian diamond mines.
The great benefit of Renard's all-weather road is that it connects the mine to major cities and major suppliers in the Val D'or - North Bay industry corridor - all within a 24 hr long-haul drive!
Where is the benefit for Chidliak save for saving some construction costs?
Will suppliers construct warehousing in Iqualuit for just one operation?
Hardly.
All emergency supplies and equipment will still need to be flown in.
PGD simply will hbave to bite the bullet and pay its way.
And I believe the cost of the road IS IN the PEA already.
According to the projected values of Chidliak by some on this BB, there shouldn't be any issue with constructing a road, no?? The early NPV speaks to this, no??
As has been pointed out by others there is a great need to PROVE UP more reserves. TIFF won't do it folks. Sure there will be increased interest if and when several intercepts show good widths at depths of 700m to 1000m, but THERE WILL BE LITTLE IF ANY VALUE ADDED to FEASIBILITY NUMBERS unless the deposit is fully drill-defined and appropriately bulk sampled.
THIS IS A FACT OF MINING BUSINESS.
Forget the port and road stuff folks...especially the idea that governments will build/finance it.
The deposit MUST be confirmed first - and that will take $50M.
No SH!T!!
AND, share price will remain stagnant simply because of the current risk status - which is HIGH!!
The BEST that S/P will do now is to reflect perhaps 15% of NPV...and that from a FEASIBILITY STUDY.
That's the way that things work in reality folks, unfortunately.
Chidliak is ONLY a PEA.
Odds are that economic numbers would decline 25% based on typical accuracy of PEA numbers.
So now you see why adding the UNDERGROUND 'reserves' and re-doing the PEA is important.
Current S/P reflects 11% of PEA's NPV @ 7.5% after tax = $471M
So if NPV is doubled with the next PEA you should see S/P reflect that, or $0.24/share.
Of course Capex will increase as will Opex.
Remember too (if anyone here realizes this) that Project NPV's ASSUME EQUITY FINANCING!
Add BORROWING COSTS and NPV tumbles!
If even possible, raising of equity for a significant portion of Capital Financing could easily result in say another 400-500M shares being issued, if in fact they could be issued at $0.50/sh minimum.
The truth can hurt folks.
ANOTHER $50-$60M expenditure to get Chidliak through FS and Permitting, plus minimum 5-8 years could deliver potential doubling of NPV to $940M but along the way another 200M shares get issued!
PGD could easily have 1.2B shares issued if going alone was even possible.
Given Market's risk assessment of typical industry developments, that would translate to 15% of NPV value some 8-10 years down the road when construction might be complete.
Say NPV is now $1.2B (or 28% higher than simple doubling) that translates into a future FULLY-VALUED S/P of $1.00/sh BUT a risk-adjusted S/P of $0.15/sh even 8-10 yrs from now.
A VERY SIGNIFICANT EXPANSION OF DIAMONDS IN POTENTIAL 'RESERVES' is needed to move the current S/P.
Selling off majority control is probably the only option to survive...and it won't come with a huge price either but will save significant dilution and perhaps facilitate financing of PGD's portion.
That really is how the world works.
LC
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