Sherlock Holmes22 Aug 2023 09:35
So lets do the deductions thing.
This is the First Equity Report: https://www.rrrplc.com/wp-content/uploads/2023/01/FEQ-Red-Rock-Resources-19-01-23-Buy-Note.pdf
In it FEQ assume 300,000 tonnes of 2% lithium ore to be produced over 5 years and sold in the local market. They say that on an NPV10 unrisked basis this is worth $39.2mil.
So it seems that was based on an assumption that what was at surface, was it. Now having had three sets of geologists look at it, it seems that this assumption is incorrect and that this particular pegmatite (Peg 1) continues into the hill and continues at depth.
We also now know that in at least some parts of Peg 1 the grade is 3%+.
We also now know that the geologists have now identified Peg 2 and Peg 3 with the possibility/likelihood of a fourth intermediate Peg 4.
To confirm that above, drilling will be required but it seems that the nearby Bikita mine assets do the same, they show at surface and then continue to depth.
Is there the possibility that this is just one super-large pegmatite showing at surface at different levels: it seems not.
The licence area is 51 hectares: 126 acres. So it is a substantial area.
Well what does that say?
1. No need for the 35% risk discount applied in the FEQ report, the volume in place is much greater than 300,000 tonnes.
2. This is now a much bigger operation than just removing 300,000 tonnes at or near surface. Remember the declared plan was to mine the first ten metres of pegmatite and then drill to see how deep it went.
3. This will now involve a complex mine design, operations plan and development plan.
4. At Tin Hill we have spodumene, petalite, tantalite, berylium and some residual tin. We don't know how much tin is left. The size of the site might now make it worth separating out the spodumene, petalite, berylium and tantalite for sale.
5. We are probably now looking at a long life mine: that is greater than 5 years.
Tin Hill is probably now large enough that the other licences are now are just cream on the top.
I don't know because no one can know at this stage but it looks like that there are several million tonnes of lithium ore in place at Tin Hill. And we we know at least some of it is in excess of 3% grade. FEQ's valuation is now well out of line.
If the above is proved up, then Tin Hill will become very attractive as a stand alone project for someone with deep pockets.
As the RNS states we now need to provide samples to potential offtakers. This is volume samples which they can process and it has to be representative of the pegmatite. So it is not little sample bags but truck loads.
DYOR
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