Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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https://www.newcrest.com/sites/default/files/2022-11/221111_Cadia%20PC1-2%20Feasibility%20Study%20demonstrates%20strong%20financial%20returns%20-%20Market%20Release.pdf
This is obviously only a small part of cadia
" with the development of PC1-2 accounting for approximately 20% of Cadia’s published Ore Reserves".
and is block cave mining so will be more expensive than our open pit.
Some interesting comparisons:
Cadia East PC1-2
0.27% Cu average grades
16 year LOM
280Mt
Copper price economic assumption 3.5 lb ($7700/ t)
It would seem from the info that has been released by Xtract or from CB's implications, our figures compare favourably with these (obviously they have not been confirmed).
IF CB's comments are correct and we have 500mt, then at 0.27% (seems reasonable assumption and the one I have been using) there is no reason to think that a major would not be interested in what we have. Whether that translates into a 10p, 20p or 30p buy-out remains to be seen !
Come on Newcrest , there's a better prospect just down the road :)
A very welcomed post Andrew, I’m sure it will help settle some members nerves with the comparisons, and with RC mineable by open pit, that should have huge implications on the projects initial economic potential that will satisfy a big buyer such as Newcrest, as has been said, are perceived to be the more obvious acquirer due to their already presence close by.
Cadia DFS helps toward ‘painting that positive picture’ in the absence of Xtract’s forthcoming statements and mining study, that there will be enough economically recoverable copper and some gold shown at Rc along with Ascot and all the other added project potential, to give an acquirer the confidence to warrant further de risking to take it to the next stages.
That is all that needs to show from the modelling, along with all the other supporting evidence that will add further asset value.
Hi Andrew
Thanks for posting, aren’t the grades much higher than what XTR are likely to have? It’s 0.49 g/t AU and 0.27% CU, or around 0.6% cueq (unless my maths are bad).
Interestingly they are quite conservative with the prices used.
Cheers
James
HI James
I was really just looking at Cu % but you are correct, their Au is better (but Ascot Gold values may still surprise from looking at some drill results). I would assume that our costs would be a lot less as we are open pit and not block cave - which may help to off-set their higher Au values?
Yes, I was surprised at $7700 used. Hopefully that may be $8k + with our calcs, assuming POC keeps rising over next few months??
Not only Ascot Guys, CuEq from RC will have no doubt had a boost from the high grade intersections found in the ‘hole in the model’ those are serous numbers that the modelling will be able to track some strike length particularly from holes like 13 that has a 28m intersect of 0.45CuEq and 26 with comparable zones amongst others. These lateral zones are quite extensive across Racecourse. Similar to the 3 lateral zones of high grade gold and copper at Ascot that has been traced over 1km of strike there.
>>>Significant intervals of gold mineralisation have been intersected on the western side of the Racecourse Inferred Mineral Resource in an area with no previous historical drilling, which will be incorporated into an updated Racecourse resource model
· The best intercept is from drill hole BRDD-22-054;
· 26m at 1.64g/t Au (1.24% CuEq) from a downhole depth of 338m
§ Including: 18m at 2.28g/t Au from a downhole depth of 346m
Even if we discount any Gold value and only use Cu %
Assuming 0.27% Cu
500mt
$7700 POC in calc (used by Newcrest at Cadia East)
1.75% in ground value
0.84 GBP to USD
500mt x 0.27 = 1.35MT x $7700 = $10.4B x 1.75% =$182M
$182M = £154.56M
=circa 15.5p (1 Billion shares fully diluted)
Probably add 2 to 3p for Ascot and 2 to 3p for FB
My calcs with different realistic assumptions, keep bringing me back to 15p (min) to 20p.
With a a following wind and a bit of luck we may get sp to 25p (equivalent) inc FB???
Hi Andrew
Looking at the below, which we know was sold for 170m upfront and 60 deferred consideration.
I get copper revenue of 6.3bn, using 8k per tonne, and gold revenue of 0.5bn using 1750 per oz. So 6.8bn total, if you then take the Eva project sale price you get between 2.5%-3.5% of in ground value (170-230 sales price).
https://cumtn.com/operations/eva-copper-project/overview/
I think the Eva project is more mature, but good to see there is so much headroom between your 1.75% (I use a similar figure) and what Eva sold copper mountain for assuming I’ve not messed up on the calc.
Cheers
James
To show a more comparable resource example only, let’s look at Cadia Hill, Newcrest’s initial open pit that was production ready in ‘98
>>> Ultimately, a resource totaling some 352 million tonnes at 0.63 g/t gold and O.16 per cent copper, or 6.8 million ounces contained in situ gold and 0.5 million tonnes of copper was estimated<<
The resource was eventually classified as mostly ‘measured’ after a total of 369 drill holes were completed for approximately 157 000 metres that formed the basis of a feasibility study that led to board approval to proceed with development in mid-1996
>>>Improved understanding of the geology of the mineralised system also indirectly contributed to subsequent discoveries in the Cadia area.<<
Shows the amount of work there is still to be done at Bushranger for an acquirer with the above paragraph showing how a similar path to cadia discoveries, will be followed at bushranger, but with the ‘added’ significant difference that, there is a further open pit potential from BR’s 2nd significant porphyry, Ascot
https://www.researchgate.net/publication/294566549_Cadia_Hill_From_discovery_to_a_measured_resource_-_A_case_study
Hi Andrew, may I ask your reasoning behind only a 20-30 million GBP added valuation for Ascot?
Would it not amount to more than that based on the extent of mineralisation now over a Km and of higher grade gold in particular and silver. From what we know, there is adequate intervals of boreholes to support an inferred MRE
If I recall correctly (without checking posting history) iceberg commented previously that an inferred resource is ‘generally’ discounted by about 50% over ‘measured’
>>>the modelling will be able to track some strike length particularly from holes like 13 that has a 28m intersect of 0.45CuEq<<
Hole 11 was the hole I mistook 13 to be that had high grade gold This from hole 11 assay summary.
>> Of particular interest are the significant intervals of comparatively gold-rich mineralisation encountered in the upper part of the hole which may be indicative of a mineral zonation system at Racecourse
Apologies, was tired and bleary eyed on phone last night.
Copper prices back in the late 90’s when Newcrest opened its initial open cut mine at Cadia hill, were sub $1. Nearly 400% increase since then. Even taking into account the inflation adjustment of about 75% increase it shows how rising copper prices from increased demand has and will further drive exploration toward lower economic cut off grades along with the advancements made in mining extraction and separation technologies, which means more resources old and new have a better chance of being economically recoverable since when Cadia Hill was first financially modelled.
So although geologically Cadia hill and RC are a good comparison, they couldn’t be any further apart from their financial evaluations in their own very different social and economic climates.
Yes, primarily because one is awesome and the other is rubbish.
If you are in at this price the opposite is true going forward
None of which is completely true, sweeping staements.
Statements, sorry typing and watching the F1 rerun.
We’ve done RC to death now on estimates. What of Ascot then?
So with some rough calcs on Ascot taken from Google earth and drill locations map
There is about 1k of strike stated in RNS so if we use say, 700m as is not cuboid with a trimmed down 300m wide and 300m deep. A 0.28 average grade considering the extra gold and silver credits and using Bens formula, and there was a factor of 10 correction on grade I recall. I’m sure it was this but correct me if is wrong formula….
700x300x300x2.7x.0028=476kt CuEq
Used RC as a guide to Ascot and in same ball park as Andrews estimate, but bear in mind the overall resource estimate will be more than just the part of the resource that is open pittable (500mt)
Knowing minimum 1.7km length, (from 71mt resource) 600 wide by 600 deep
So for example and trimmed down to-
1200x400x400x2.7x.0028=1.45mtCuEq
Now taking into consideration this posted by Theiceberg-
Theiceberg 04/11/21 @18.57 >>>……for those interested a discount of 50% is applied (industry standard) for inferred-indicated over measured with a PFS.
So Ascot,
700x300x300x2.7=170.1mt
170.1x0.28= .476mt x $7700= $3.665B x1.75%=$64.1M
$64.1m = £54.25m
One could assume then, with an inferred MRE, a value of Circa 5-6p for Ascot fully diluted.
howezap, I prefer to add RC to Ascot plus some arm waving estimates for probable anomalies/porphyries (plus Footrot) making up a sum total of about 2 MT. I think in total we must be approaching this figure.
Hi Cygnus, of course, that’s just as good a way as any, my point being that with an MRE a more realistic value can be attributed to Ascot toward that ‘overall’ value in response to a previous up in the air value of 2-3p for Ascot.
But what is true is that is probably is more reliable to guess the tonnages than to try and calculate dimensions of the ore bodies, as just adding 10’s of metres to variables changes the results wildly.
We’ve been here many times before! But it at least alleviates the boredom while waiting.
howezap, yes, I have a spreadsheet with multiple variables that I like to play with, using both conservative and enthusiastic figures to get a feel for the range of possible outcomes. Kills the time.....
The problem with doing these calcs, and I acknowledge that I am as guilty as anyone in doing so, is that there are 5 variables ( %Cu, tonnage Mt, POC, % inground value and USD conversion)
When you multiply these 5 variables out the results can be substantially different with just a slight change to the variable value.
Example
5 Variables
2 x 2 x 2 x 2 x 2 = 32
Take just 10% of the variables
1.8 x 1.8 x 1.8 x 1.8 x1.8 = 18.9
Add just 10% on
2.2 x 2.2 x 2.2 x 2.2 x 2.2 = 51.5
So result is 19 to 51 (circa x 2.7 difference with just a small 10% reduction to 10% increase)
USD / GBP has moved more than 10% in last 6 weeks
As others have said, it helps kill the time :)
Just need the real numbers now Andrew.... cant be long now.
Colin, what can you tell us about progress in the model and number crunching?
A relevant link
https://wordhistories.net/2016/12/28/silk-purse-sows-ear/
I see our bigoted misogynist, Willy wet-legs Porv is back. The origins of that proverb is more suitable for you champ
>> If men only fought outwards into the world?women might be devoted and gentle.?The fight’s got to go in some direction.?But when men turn Willy wet-legs?women start in to make changes;?only instead of changing things that might be changed?they want to change the man himself?and turn the poor silk glove into a lusty sow’s ear.?And the poor Willy wet-legs, the soft silk gloves,?how they hate the women’s efforts to turn them?into sow’s ears!?The modern Circe-dom!
Touché!
Welcome back Ted, always a pleasure playing bat and ball with you mate.
From existing conceptual mining study - >>the modelling key assumptions were based on the Cadia Hill Copper-Gold Mine located some 75km northwest.<<
How bout that!
Porphyry are all about consistency in low grade and in bulk.
Also from existing study prior to all additional ore to be included from phases 1&2.
>> The Conceptual Study concluded that the Racecourse deposit contains significant low-grade tonnes of copper and gold which may be economically recoverable at copper sale prices above US$4/lb. Optimal believe that the economic recovery and processing of ore with low grades between 0.1 - 0.2% Cu is pivotal for the economic viability of the Racecourse project, with the sensitivity analysis showing that for each 0.05% drop in cut-off grade the NPV drops by as much as AU$341 million. Overall, Optimal believe that taking account of the project's large size and relatively low grade, conditions should support the efficient and productive mining of the deposit
Also that was based on the only the original JORC, so some of the 'dead rock' that would have been recovered in that original study now includes copper, which changes the economics and means a lower copper price required.