What the Analysts Say
WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.
Website: www.beerandco.com.au
Company: Pilbara Minerals (ASX: PLS)
Pilbara Minerals acquired a 50 per cent stake in the Tabba Tabba project in October 2013.
Its partner is the privately-owned metallurgical engineering company Nagrom.
PLS published a feasibility study on Tabba Tabba in February and has since raised equity to bring it into production before the end of 2014.
In May 2014, PLS announced the acquisition of 100 per cent of Pilgangoora, 55 kilometres from Tabba Tabba in the Pilbara region.
Tabba Tabba to start
PLS is expected to get into production within two months, to generate cash.
It has 162,000 tonnes in the mine plan, including Reserves which will be mined at the rate of 120,000 tonnes per year.
Tabba Tabba has a further 51,000 tonnes in Resources and Beer & Co expects 50,000 tonnes near the pit and further extensions along strike and nearby at Strelley.
PLS has a 50 per cent share of Tabba Tabba.
Pilgangoora
PLS has a 100 per cent interest in Pilgangoora, which is 55km from Tabba Tabba.
Beer & Co’s valuation of Pilgangoora is heavily risk weighted. It is based on an Inferred Resource of 10.4 million tonnes at 240ppm tantalum, including 8.6 million tonnes grading 1.01 per cent lithium, and a further extension of 15 million tonnes at 240ppm and 1.25 per cent lithium.
PLS reported there is now 7km of strike mapped, which extends 4km beyond the
Resource.
This adds confidence to Beer & Co’s estimated mining inventory.
The grade of lithium was reported for 390 of the 509 samples.
Of these, 251 were at one per cent or higher, so the Resource grade is likely to be higher than our estimate.
The tantalum grades are consistent with, or slightly better than, our estimate.
The lithium grades appear to improve to the south and the tantalum to the north.
This give PLS potential to manage supply.
We are likely to upgrade our valuation when PLS produces product, when the Pilgangoora Resource estimate is revised and as PLS progressively de‐risks Tabba Tabba with drilling near the pit and at Strelley.
Website: www.hartleys.com.au
Company: Renaissance Minerals (ASX: RNS)
Robust and Viable Scoping Study Delivered for Okvau
Renaissance Minerals has released a positive Scoping Study for the Okvau gold project (100% owned), located in Cambodia.
The study, based on the development of a 1.5 million tonnes per annum CIL operation producing approx. 93,000 ounces per annum from a single open pit over an initial 8 year mine life, confirms the economic viability of the project.
More detailed development studies will now commence with the Pre-Feasibility Study (PFS) expected to be released in late Q2 CY15.
The scoping study was based solely on Indicated resources, providing for a mining inventory of 11 million tonnes at 2.3 grams per tonne gold for 794,000 ounces (implied M&Ind conversion of 72%), with an open pit strip ratio of 5.7:1 (W:O).
Capital costs are estimated to be US$133 million and include an approx. 10 per cent contingency (US$10 million) and pre-production mining of US$10.5 million.
Life of Mine (LOM) operating costs (C1 cash costs) are expected to be US$735 per ounce with LOM all-in sustaining costs (AISC) of US$778 per ounce.
Assuming a gold price of US$1,250 per ounce capital payback is expected within 2.6 years, or within two years at a higher US$1,400 per ounce gold price.
Okvau resource upside with potential for new discoveries
The initial mine life of 8 years is considered ‘Base Case’, as the Okvau deposit (1.2Moz resource) remains open to the north-east, south-east and at depth, as such further resource growth is anticipated.
Expanding the mining inventory provides opportunities to increase mine life and/or potentially increase scale of the operation (ie increase to 2mtpa).
The initial open pit mine design is for a three stage cut-back, with the average strip ratio for the first five years of the operation estimated to be less than 4:1 (waste to ore).
Drilling is currently underway along the western margins of the Okvau deposit to test up-dip extensions, part of a larger 15,000m program aimed at resource expansion and new discoveries.
Surrounding Okvau, the company has plus-400 square kilometres to explore with highly prospective geology and multiple drill ready targets to be tested.
Our preliminary sum of parts valuation for RNS has been updated by the release of the Scoping Study.
Our capital estimate remains unchanged at approx. US$150 million, which is slightly higher than the scoping estimate for US$133 million.
We model first gold production in early 2018, based on the current schedule of PFS release mid-
2015, DFS release mid-2016, and then assuming 18 months to complete funding and for construction.
Our modelling suggests that the Okvau project is feasible at the scoping level and it should progress to more-detailed development studies.
Drilling has already confirmed extensions to Okvau, with potential for more shallow high-grade additions to resources.
The drilling program currently underway is expected to provide strong positive news with the potential for new gold discoveries.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.
The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.
The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.