RE:RE:ISR AT WHEELER-PHOENIX So ... until the ISR mine is actually up and running there is development risk. This is one more step, albeit a big one, on the path to actual mining and pulling pounds from the ground. The ISR mining method is unproven in the basin and for that matter Canada. One paradigm would be to think of the risk continuum that exists between engineering the mining of Phoenix and the day the first gallon of U pregnant lixiviant is piped up as a pie. Different sections of the pie represent different issues needing resolution. For example - a section of the pie could be seen to be the hydraulic conductivity of the lixiviant from insertion to extraction wells, another the resilience and durability of the ground with respect to closure of the wells, max-perf tunnels and freeze holes over time, another the ability of the lixiviant to extract the U from the host rock, etc.
De-risking the development process is akin to consuming the pie, piece by piece. As we go along eating the pie we have to pay piece by piece – a cost center, not a profit center. De-risking has to be done to get to the point at which banks and other financial sources will lend us money to actually build the mine. If u go to the site and read through the info and you’ll get a sense for how many slices of pie there are. Not likely that the de-risking process, in this case consuming of one section of the pie will be seen by investors to be additive to the share price.
If all goes well, the engineers are predicting that the all in sustaining cost to ISR mine Phoenix is $8.90 usd / lb. Today’s spot price is $33.35 usd / lb – a difference of $24.45 usd / lb and the design calls for 6,000,000 lbs per year. A gross profit of $146,700,000.00 per year – at today’s spot price. We have to wait to see.
What do we see the Risk-Reward Ratio to be? Each piece of the risk pie consumed changes the RR Ratio to the share holders favour.
What will move the share price ? – major changes to the RRR i.e. spot price doubling, start of production in line with the design parameters, a take over.
Another way to answer your question would be to ask – What would happen if the testing failed, that the concept wasn’t proven?
GL2U – B2S2