Hello Confluence
Regarding you private inquiry and GS's last post.
What do I think of it?
I don't get it... on Munn Lake, SUF is going to spend more cash, albeit not all there's, chasing dikes that they have indicated there is little evidence of striking more that 300m underwater. The NR reads like they are going to drill in the HOPE that the strike extends onto land! I just hope there is a great deal more information that SUF has not shared with us...
Its almost like there is an emotional commitment to this play.
At worst, a Back Lake mine could be modestly profitable but, as I noted previously this week, it would never compete (in profitability) with a pipe based mine. Even if SUF proves up 3km of dike strike (which seems unlikely based on NR's since they reported that the train narrowed up to the lake), they face the risk that Kennecott will back in and they'll be left with 40% of a small dike mine.
If SUF finds big strike extensions, and if KCT doesn't back in, and if SUF is able to hold onto its 70%, and if SUF is able to gain %'s from KLA & IAR for development, and if the dike widens from 12m to 25m rather than narrows, then maybe, just maybe, there might be some sense in this decision, but my GOD, what a total crap shoot!
Technically, and from a potential probability and profitability stand point, there is absolutely no comparison to this morning's Yamba news. However, despite there being very very strong evidence of multiple Canadian pipes to be had, SUF says they're going to do some more sampling to refine the targets!
I have the sense of a super conservative methodology being employed here as compared to Munn Lake.
It appears to be management's intention to sample just down ice of inshore targets this summer and sonic drill just below all of their lake targets next March. It would appear, that only after HB has found good geochemistry immediately down ice of their targets, are they prepared to drop a drill.
Considering the scarcity of a budget, and the modest success ratio of geophysical signals to pipes found this spring, it almost seems as if SUF's confidence in trusting their interpretation of the data has been shaken and certainly their preparedness to take even modest risks, appears very limited.
The best I can hope for based on this NR, is that it is management's intention to build interest in the play over the summer by means of regular and frequent updates that will consciously raise the market's awareness with the intent of building interest towards a fall drilling program.
Personally, I believe that the market will be very disappointed by this NR in the short term.
In the long term it would appear that more than ever, this play is extremely exciting in its potential and SUF has and will retain a much larger %.
Management just does not seem to be prepared to find sufficient drilling funds this year and I presume, unlike the Back Lake play, none of the partners is prepared to kick any $$ or %'s in to advance the program.
Damn shame!!
I just hope that I am being overly pessimistic by reading too many go slow signals into this NR.
Regards
***
On another note, this on the wire of interest this morning:
July 21, 1999 07:29
Zimbabwe's platinum riches, poser for mining firms
By Godfrey Mutizwa
HARARE, July 21 (Reuters) - Zimbabwe's platinum deposits, the world's largest, may never be fully exploited due to poor geology, as yet unmastered by the world's best mining firms, analysts say.
The deposits, estimated at over 4.5 billion tonnes -- bigger than South Africa's 3.5 billion -- claimed their largest victim yet, Australia's Broken Hill Proprietary , which closed its Hartley Platinum Mine last month after toiling for three years and raking US$545 million in losses.
But analysts say the nascent industry, although severely jolted by the closure of Hartley, has the expertise and resources to survive and suggest Hartley's size may have been its archilles.
Innovative mining methods may be needed to viably extract resources from the mineral rich Great Dyke, a layered igneous structure that truncates Zimbabwe through the centre for 550 kilometres (342 miles) and is up to 11 km wide.
"It (the closure of Hartley) has made a big dent on the future of platinum mining in this country," said Peter Simpson, a director with mining consultants, Peacock Simpson Associates.
"But the potential is there and hopefully someone can get it right," he told Reuters.
Hartley, he said, could be revived if operated by a company with little debt and on a smaller scale.
"The problem with them (BHP) was that the huge capital investment and production could not match the throughput required. If someone takes over with a zero debt burden, I am sure there must be a way it can be operated profitably," Simpson said.
But others are not so sure.
"The nature of the Great Dyke means that its values are found in narrow zones on shallow dips, preventing the use of gravity to simplify mining and increase its scale of operation," mining consultant John Hollaway, wrote recently in an industry journal.
"The Great Dyke may be a world class resource, but it does not allow the development of world class mines," Hollaway said.
At Hartley, BHP used labour intensive underground mining while Anglo American Corporation 's local subsidiary, which is considering developing its Unki claims, proposes using innovative systems such as diamond-coated cutting wires. Australia's Zimplats which bought Hartley, plans open cast mining at its Ngezi mine.
Hartley, Zimbabwe's single largest mining investment since independence in 1980, was shut -- the government says temporarily -- on June 2, after BHP concluded it was unprofitable and unsafe.
However both officials and analysts say there is great enthusiasm to find a way past the geological challenges posed by the nature of the ground on the Great Dyke.
The Zimbabwe Mining and Smelting Company, a local firm already producing platinum, albeit at a lower scale at its Mimosa Mine, recently said it was looking for a partner to expand production.
Australia's Delta Gold which bought Hartley through Zimplats for a nominal US$3 million is also looking to develop its huge claims at Ngezi as well as seeking to revive Hartley.
Added to that are numerous small-scale mining units dotted on the Great Dyke ridge.
"We are confident that the platinum business will grow. The future is there. Perhaps what is required is that the government give the facilities that mining companies are asking," Chamber of Mines Chief Executive David Murangari told Reuters.
"I think it can be done using a different mining method to what BHP used and I think this is what is being anticipated at Unki and Mimosa," Murangari added.
BHP said unstable ground conditions resulted in safety problems which led to loss of reserves and dilution of the ore compared to those found following extensive feasibility studies.
The studies had shown that the Hartley complex contained over 200 million ounces of platinum-group metals as well as quantities of associated nickel, copper, gold and cobalt, which for now, appear destined to stay in the ground.
((Harare newsroom: +263-4 725--227/8/9, fax 263-4 706-120,
e-mail godfrey.mutizwareuters.com)) |
