GRS - What happens next?9 May 2022 08:11
We have a geophysical model, but not yet any assays, that strongly suggests IOCG. Where do we go from here?
Let's get one thing straight – the GRS is a big project, quite possibly the largest for a decade. There is the potential here to be worth a lot more than Greatland/Newcrest's Havieron or Chalice's Julimar, both multi-billion $ before production. Neither of these company's shares went from zero to hero overnight, but increased steadily in line with the expansion of resources, a process that has already taken 3-4 years, and is continuing.
Many institutions have internal rules preventing them from investing in mining projects unless a JORC or NI 43-101 compliant resource has been declared. Such a resource will also be necessary for a BFS, which is a normal requirement for raising external funding. For a project the area and depth of the GRS, this will require a lot of drilling to enable resource definition – does the mineralisation occur throughout the apparent orebody, and is it of consistent grade, are there high-grade areas, etc?
The AMT apparently shows zones that could host more intensive mineralisation. I would guess that a developer would start there, with drill holes 1500-2000m deep, then follow up over the whole target on a 500m grid pattern, which for an orebody this size is maybe 30 or 40 km², so perhaps 100 such holes would be necessary. That will give a pretty good initial idea of the potential. Depending upon consistency of mineralisation, infill drilling on 100m or even 50m grid would follow - that's a lot of holes. I'm not sure how much each hole is likely to cost, but $50 – 100k each is not unlikely in this terrain.
Clearly a lot of funding is needed to move this from discovery to BFS stage. KAV have made it very clear that it is the intention to JV or sell projects as they mature. The big question is at what stage is the best time to sell in order to maximise returns? That will depend on how much KAV can afford to spend to move the project a bit further along from the theoretical to the practical, and of course what sort of offers are on the table.
As well as getting an idea of how much of what is contained in the GRS, a potential partner or buyer will want to do a comprehensive appraisal as to how much it will cost to set up what will be a huge mine, process (what is the metallurgy?) and transport the output, so don't expect an immediate contract signature.
Expect to hear lots of rumours and false claims, both to the upside & downside! Long term holders are likely to gain a lot more than impatient ones. Just my opinion of course.
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