43-101I've been gathering questions in messages here on SH and by email for the past few weeks. There are some themes that certainly became consistent and were posited by multiple investors. None among them were more prevalent than questioning the current view of LME on the production on a Mineral Resource Estimate.
Seeing as it was topic #1 I grabbed a nice long conversation with Cynthia yesterday and she explained her view on it so thoroughly that I left very comfortable as a shareholder. She will discuss this at the AGM to be sure but let's make good use of our time between now and then and table her view on the subject today.
The headline is that there is zero opposition to completing an MRE for Laurion. In fact, any transaction will most likely not proceed without one. Cynthia's view is that there is a tipping point in terms of exploration where the report is wise to produce in terms of risk.
What does that mean? If you have only explored a small portion (relatively) of a property and then produce an MRE, remember that the E in that acronym stands for Estimate. The risk of the process is having to revise it downward after it's been produced. There are examples of this that you can find as easily as I can so I'll leave you to it. The bottom line is that this led to the ruin of the companies that had to backtrack from the MRE they had produced and this only happened because they produced the report too soon. They jumped the gun.
Cynthia felt that Laurion was getting close to the point where exploration merited the production of the estimate. Doubling down on targeting by magnetic survey and drilling in the shaft areas is certainly part of getting across the finish line there. The delta in that process now is the aquisition of the Twin Falls property. Adding 10km of totally unexplored property to a 47km package is a major addition. What that does is reduce the overall rate of exploration of the fully assembled property.
Add it all up and the finish line has moved out some so more exploration (specifically drilling) will be required to get that ratio to the point where the 43-101 is a less risky proposition for shareholders than it is today.
How much drilling? Not an infinite amount but more than we've done. Her target for exploration on the property (whether we own it or someone else does) is probably 10,000 - 20,000 meters north of where we are now. Not a crazy amount but it's work to be done. to frame that we're approaching 50,000 meters of drilling after this program that's running now (roughly).
NOW..... what do we need to execute that program in an expedited manner? Cash. For equipment, for drilling contracts and most importantly for additional people to execute all of the above. The human resource, per Cynthia, is by far the hardest one to access and get right.
What did Laurion add more of recently? Cash. The more of that we have, the shorter the path to getting on the right side of the exploration ratio that merits a lower risk 43-101 report on the property. Cynthia confirms that aquirors see it the same way.
See how all of that fits together strategically? I know for me this connected alot of dots and I hope it does for you as well.
Have a think about all of the above and if you have questions/thoughts let's have a discussion. If this was a topic you had sent to me, the more time we spend on it here the more productive the time we spend on it at the AGM will be.
Hope this helps,
Steve