10 million tonnes is the conservative estimate that most of the analysts are using. The map attached to the press release indicates a minimum 'global resource of 7 mt, but that the deposit is wide open at depth and along strike. Just to put it in perspective, if there is only 7 mt ever produced and production never exceeds 200,000 t per year (i.e. 30%+ petalite is equivalent to 60,000 t concentrate production), the mine life is 35 years! The planned in-fill drilling (holes to be drilled are indicated on the map) is required for the mine pre-feasibility study, probably no need to increase reserves - the exploration effort now will focus on cesium and tantalum.
Regarding the project economics, if petalite is sold for only US$200/tonne, Brenark's sensitivity analysis indicates AVL's shares are worth a minimum $2.42 (15% discount rate), $3.69 (10% discount rate) or $4.29 (8% discount rate). If sold for US$250/tonne, the numbers are $3.62, $5.23, and $6.19, respectively. Last quoted prices were US$270, this is a result of demand for lithium ore concentrates - the market in the U.S. alone have increased by 70% since 1992 according to USGS statistics.
Based on the US$200 DCF scenario, the minimum EPS (fully diluted) = $0.50-$0.80. If you compare the implied 'price-earnings ratio' (5:1) with other producers in the mining sector (Range: 8:1 to 25:1), $3-$5 is a VERY conservative estimate. Ignoring the potential upside from subzones of cesium/tantalum or another major discovery (eg. Wolf Mountain), what this clearly indicates is that Avalon's stock price has lots of room to move upwards.
Just one comment overall - the credibility that this company has earned (eg. through its no promotion/just the facts IR, visual representation of drill results and the planned drill program, demonstarted commitment to full disclosure, management commitment to continue to move forward on projects that will build shareholder value at a time when the mining sector was at a all-time low) is a model that junior exploration companies could learn from.
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