This was posted on Raging Bull.
future prospects
I've been participating in Starfield since its IPO days, and have since accumulated, well, a a lot of Starfield shares. I haven't posted here for quite a while, but have been lurking. What follows are a few observations re: future probabilities.
First, some more or less undebatable axiomatic facts:
1. They have already proved up enough ore for a profitable mine, no matter what is yet to be found.
2. Save for where INCO drilled (and that was mostly shallow--but a lot of holes), most of the prospective sources of ore known to them a few years ago have not been extensively drilled. Whole 'traditionally known' areas haven't been drilled at all.
3. They have found ore every time they have drilled where conventional indirect (magnetic, etc.) techniques have indicated it.
4. The kind of UTEM they are now using is new technology, but shows wide-ranging, thick signatures where they have not yet drilled. This technique is conductivity-based, andjust about the only thing that could radically distort the findings is graphite, none of which has been encountered at Ferguson Lake.
5. They have now drilled a few times into the new areas indicated by UTEM, and every drillhole confirms the technique and increases the tonnage. This is so despite the fact that this kind of deposit traditionally disperses high concentration ore through folding, etc., making it likely that one could easily miss the ore body even when drilling right through the middle of it.
6. The majors are seriously interested in the project, and (this is the first bit of gossip-based info here) one or more has evidently proposed securing majority control. However, the majors right now think that Starfield will not be able to secure sufficient financing to take the drilling to the next level, know that junior mining stocks in general are unfashionable, and think that they can play a waiting game.
7. Starfield however has been able to secure adequate financing right through the project so far, and with far less evidence of viability than there is today.
8. Starfield's management are far removed from the typical stock promoter types of old. They are competent, focused, knowledgeable, and effective with company money. They have assembled an impressive support circle of mining and geological professionals around them.
9. Junior mining stocks *are* unfashionable. e-dot wannabees with a flashy but dumb idea can still secure ten times the capitalization of Starfield in an IPO without having any assets, etc.
10. In contrast, Starfield *does* has a billion-plus dollars proven in the ground.
So what about the future?
1. Tonnage will radically increase (a no-brainer prediction)
2. Grades will remain about as per before, unless there is a concentrated central ore body *and* it is discovered (the latter always being tough to do)
3. Tonnage, grades, gross value and net value placed in a rational argument will be completely persuasive for those in mining and those who finance it. This will continue to provide Starfield with money, and in combination with financing, will get the majors increasingly concerned about each other.
4. But (and this is really a guess), there will be a point--perhaps rather soon- when the tonnage is so large that Starfield stages a PR breakthrough to the mass of investors, and to mass readership papers like the Globe and Mail. Sadly, this will be as a result of the magic of large numbers being quoted, rather than the rational evidence that is already available. This will create an entirely different trading dynamic, one in which the majors are placed in an increasingly less powerful position, and where they will therefore have to return to the table with more sensible offers than before.
Does any of this seem reasonable? |
