Tad wrote: ThoughtOnThis
Any thoughts on the Over-Under for the STU share price based on the findings of MDA? I like everything I've seen so far from STU so this is a real question.
IMHO, Stuhini is potentially one of the most undervalued resource exploration companies ...
IF molybdenum prices can maintain the current US$18 - $20 / lb price range for the foreseeable future, and rise incrementally over the next decade or two. And consider the Que, Big Ledge, and South Thompson Nickel Belt Projects as welll as the remaining ~19000 hectares of Ruby Creek that lay outside of the actual moly deposit.
We may have received an indication of the current viability of the Ruby Creek moly deposit from the recently released Greenland Resources feasibility study for that company's Malmbjerg moly deposit in Greenland. I highly doubt any of those estimated production numbers would be of any impact to Stuhini as I am assuming Stuhini will sell the Ruby Creek deposit for perhaps 1% of the inground value and retain an NSR on production after a sale, or perhaps bring a strategic partner to develop the project, and a receive a percentage of production.
While we can not assume any of the costs that Greenland Resource reported for CAPEX of a mill, or life of mine operating costs ... and the fact that we are awaiting Mine Development Associates' update on Stuhini's Ruby Creek moly deposit .... it could be somewhat indicative of just what the approximate costs for Ruby Creek could be in British Columbia. Ruby Creek is not quite as remote as Malmbjerg in Greenland, and costs may actually be somewhat lower considering Ruby Creek is road accessible, and Malmbjerg will have to deal with water transport in the North Atlantic .
If we used the US$800 million for construction of a mill at Malmbjerg and the US$14.42 / tonne operating costs for Ruby Creek .... it could indicate that the costs of construction for Ruby Creek have risen from the 2007 Kaiser feasiblity study of US$640 million, or roughly 25%, not too bad an increase considering the 15 years that have passed.
Using the Malmbjerg estimated life of mine operating cost per tonne of US$14.42, we could calculate some hypothetical results.
Ruby Creek's 2009 resource estimate prepared by Golder Associates for Adanac Moly Corp showed the moly resource as :
https://globaldrillingsolutions.ca/wp-content/uploads/2017/06/Global-Drilling-Resource-Update-2009.pdf Using a 0.04% grade cut-off resulted in 314,430,000 tonnes grading at 0.067% moly for a total of 461.6 million lbs of molybdenum.
Let's assume an average price of moly at US$18.00
0.00067% x 2200 lb/tonne = 1.474 lb/t 1.474 lb/t x US$18.00 moly price = US$26.53/t US$26.53/t - US$12.42/t = US$14.11 US$14.11 x 314,430,000 tonnes = US$4.436 Billion US$4.436 billion cash flow over the life of mine. Out of which the estimated cost of the mill and tailings infrastructure (US800 million, financing costs, rolling stock, sustaining capital costs, etc etc. Most likely about US$1 billion all told.
Still leaves approx US$3.436 Billion of cash flow using those above assumptions.
All remains to be seen ... but I like the current odds.
;-)
GLTA !