RE:RE:Sprott not crazy about mill purchaseGeoD,
Also thank Pierreg for providing the transcript of the Wrap-up talk. Starting at 13:40, link below.
https://soundcloud.com/sprottmoney/sprott-money-news-weekly-wrap-up-32919
I would agree with GeoD on this, but EricS was not jumping up and down on this. He simply said he was disappointed that the "mill" deal was done before the RE estimate for BH is available. He said there's not enough information out there to indicate that we will have an ore body for a mill... but apparently RNX BoD and Mark S were confident enough to propose the deal. Let me be brave enough to provide some comments to ease off ES's disappointment.
- I can understand the disappointment as well, since perhaps he was not given enough warning about this deal for MS. But MS has given enough indication that he want to spread the "control" of ARX around a bit. So, having another anchor at the other corner would provide RNX with some competition from the two anchors. But, there is nothing that is really transparent. We might just find out one morning that AS has increased his holding to more than 10.3% and would be high enough to take the #1 spot again. Yah, what would he do would some $700M sitting there in his KL stake?
- The deal is not only for the mill. It's for the mill, the mining operations at HGO...and Polar Bear property.
- The mill itself would cost over $100M to built. It would take at least 2 years to go through the licensing requirements for other stuff like tailings/environment issues, commissioning, staffing to get it running properly. The HGO mill is a turn-key operation. It's ready to go, and RNX has tested BH ore and got an excellent recovery of something like 94%?
- The cost of the entire deal (mill and properties) would be A$50M (which is 5% cheaper than Cdn$, but for the sake of argument, let's ignore the difference.
- Polar Bear alone was bought by Westgold for $9M. This property has several resorces. The most prominent is Baloo which has an RE of 0.24Moz (2017) open-pit-able and within a short distance, ~10km, from HGO mill.
- Next property is Mt Henry, about 70km straight down from HGO mill (on good highway #94). It comes with an RE 2Moz at ~2gpt (good enough for an OP operation, and they are makingsome profit with this grade. Imagine if the grade were 6gpt coming from BH. Currently, the grade form BH is expected to be higher than 4gpt (for 2018, and 9.42gpt for Q4 2018, see slide 4 of the Conference Call slides).
- RE from BH: My bet is that the RE would be good (in the order of 1Moz, my lower bound estimate, and with a high enough grade, at least gpt). MS already knew this, and pehaps ES has some inkling, but he could not tell the world since he is an insider (>10%).
Note: Just tracked down the mills and mines in question with Google Earth to measyre the distance and see what can be seem from satellites. The mill looks impressive. It's at the kink of Hwy 94 (when it turns sharpy right toward Higginsville at 90 deg. The processing tanks and ponds are clearly visible. There is a ground picture on the Web showing the mill all lighted at night (but this picture is taken from the North side, so you would need to adjust to compare with the satellite picture (North pointing up), lol.
The pit at Mt Henry is a long and skinny one (~1km), just south of Norseman (at the top left corner of the Lake Dundas). Hwy 94 terminates at Norseman and Hwy 1 would lead south and Mt Henry is at a sharp kink.
In summary, this is a good deal for RNX. If ES read this he would be convinced. But, with the help that he has access to, I would bet that he already knew all this. Will see what his next move will be.
GH11
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Geodan2 wrote: Thanks. It did take me 5 mins to find the RNC part, 13:40 to save others time.
Disagree with Sprott whom noramlly agree with. They have been running bulk ore for years there and say they will save $10 million a year from that alone (milling costs).