Thanks for the comments. Its good to have reality check. One quick answer to your question , YES. Not in terms of ounces produced, but in terms of profit. Dunka Road would definitely be more profitable than either Voisey Bay or Stillwater should everything go well.
A few points to clarify.
Because of its huge size the Dunka Road deposit does contain more total nickel and platinum than VB and Stillwater. Currently there is at least 500 million ounces of PGM's in the deposit. This is in the total resource. However at even the best production rates it will not produce 1 million oz's of PGM per year, unless they get some higher grades. Dunka MAY get up to 600,000 oz PGM/year. The wide variety of metals contained in Dunka Road give it a tremendous advantage, especially during low metal prices, and lookout should metal prices recover.
Stillwater is an excellent deposit and should continue to mine profitably, but it is dependant on the price of PGM's. Also it should be noted that the cost to produce those 1 million ounces/yr at Stillwater will be substantially higher than at Dunka Road.
Which is a better investment 1 million ozs/ yr that cost $225/oz to produce or 400,000 oz at $40/oz?
PGM prices is where I get a little nervous, especially for palladium. I've been a long time fan of Platinum, it's actually my favourite metal. I have spent a lot of time in Russia and the PGM resources in the ground are several times larger than anything we have over here. Secondly the Russians are holding on to control of these resources and not letting foreigners into the deposits. The good thing is that they can't get the PGM's out of the ground efficiently. This all means a shortage of supply and therefore good prices. However it is only a matter of time before these resources are exploited. So in the short term (2 or 3 years) PGM prices should be good.
Voisey Bay is also a tremendous deposit, the best found in a long time. But if you add up the total value contained metals in the resource, Dunka Road and its vicinity are worth more. I believe that is MAYBE what the article is trying to say, though these articles tend to over promote the point.
I'd also like to point out that measuring using contained metal is fine, but you have to get it out of the ground. Due to its size Dunka Road would probably start production at 60,000 to 75,000 tons per day before expanding in a series of stages to 150,000 tons per day. This is how a major mining company would approach the development of such a deposit. Because of the size of the deposit and the surrounding area, this mine would last over 25 years and would produce a profit of between $100 million and $300 million per year depending on production rates and operating costs, etc. It is fair compare Dunka Road to Voisey Bay and Stillwater but which is actually better is difficult to say. I'd gladly take any one of them and to be honest once you have a deposit of these types it does not really matter which one is better.
In the long term IF everything goes well Dunka Road will make more profit/yr than Stillwater and about the same or better then Voisey Bay. The keys to Dunka are the size and the grade of the deposit. This puts Dunka on par with some of the largest , most profitable mines in the world, mines like Grasberg (Papua New Guinea) or the Highr grade (>1%CU) large copper mines of South America.
Finally, I have always liked polymetallic deposits as these tend to be the types of deposit that can survive almost anything the economy can throw at them. Historically, these tend to be the longest lasting and more profitable mines, providing they can produce the metals for operating cost that fall within the top 25% of producing mines. Hope this well Help. Shaun. |
