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QUOTE (Talonbands @ Monday 11/02/08 12:07pm)

I wonder if Heron's recent announcement spooked the market a bit?

 

http://www.heronresources.com.au/downloads...hrr20080125.pdf

 

QUOTE
Escalations in capital expenditure are due to significant increases in the cost of acid and power plants (97% increase). Escalations in operating costs are predominantly due to sulphur price rises, and the impact of higher oil prices on transport and mining costs. Ongoing increases in construction and labour costs also contributed to the escalated PFS outcome.

 

I'm no mining engineer, so not sure what the implications are for GME. However MRE's push into heap leach is encouraging.

 

 

 

 

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QUOTE (Talonbands @ Monday 11/02/08 12:07pm)

Howdy,

 

Still don't mind these stocks or others. But stood aside because was bearish on the market overall and more to the point the ability of smaller miners to get partners.

 

GME and its deposits are smallish and yep I liked them pre US meltdown but its become clear at least to me the amount of finance and cost of finance for the smaller end of town is an issue. They need money to develop any of them. On top of this as mentioned the costs of digging it up has left me somewhat amazed at the robust price of some of the larger ones ... as for GME its small and highly spec ... always was.

 

Long term the likes of HRR GME and MLX similar ... eventually they will be dug up ... problem with the acid process heap leaching or HPAL stuff is the way it works. Actually its better to have a lower metal concentration rather than higher when looking at recovery rates and recovery times with laterite or lamonite deposits. This one is located right near another operator and if we could fast forward 10 years someone will be developing them irrespective of anything else. Catch is to develop either way needs capital and the break even of a laterite/lamonite thing is about 3 times the cost of a decent grade Sulphide deposit.

 

So when the finance side is tight ... people worried which way to turn ... costs clearly going up ... power via the oil price acid and the rest ... the further away they are the harder they are hit.

 

GME is in the ultra high risk for me and whilst decent amounts in the bank and they are adding to the size and defining the known deposit size and upgrading the confidence of the deposit ... the production or eventual production date is still a zillion miles away.

 

Hard at times like these but disposed of GME and MLX when my view on the overall market changed back in October. Both this and the other pet MLX had risen about 50% off their lows and despite the market being nutzo bullish just got rid of them. No brilliant idea or belief they went back here ... just saw the writing on the wall with the market overall and couldn't look the other way with such a bounce.

 

Here and now ? This and the other ones HRR MLX and similar ones in other metals which have world class or very large deposits still of the same view longer term. eventually they will need to be developed ... with the Nickel ones ... they prefer financing a Sulphide deposit as opposed to laterite or lamonite as the HPAL process costs 2 billion or so for a 40,000 ton per annum nickel production thing. GME is going down the cheaper option of a heap leached thing which whilst it look promising the results and low up front costs .... it remains to be seen. All goes back to the days of Anaconda and the nightmare it turned out to be one of the first HPAL things used and market at this stage ignoring the fact the Anaconda thing at Murrin Murrin now working for many years but with ups and downs is also testing the very same process to up their production without the big up front costs.

 

Suppose all in all not a bad level here but it needs cash ... or finance and the eventual cost per lb or Nickel produced the key. If a high grade Sulphide nickel one can do it for under us$1.50 lb and when one looks at the current implied US$4- /$5- ... the likely real cost will be US$6- per lb. Most of these guys are messing with things at this stage and a scoping study is a bloody waste of time .... and this is what the money is being spent on as opposed to a BFS ... quite often these scoping studies are total rubbish and I think the professional market knows this. When i see people wasting time and shareholders money on a scoping study which takes 18 months prior to BFS and then when i look at the scoping study and go ... its total BS ... I just get annoyed at the waste of time and money.

 

Not suggesting anything about GME ... it is after all using a little used process with Nickel via heap leached pad thing so it HAS to test but my patience is not that good to await study after study.

 

I mention scoping studies not in reference to any Nickel ones its more other minerals which some during the recent downturn have come out and been the very far side of fictional ... one suggested a lower cost per lb or production using the same process as a mine next door which had a cost say of 30 ... and had very little cover rock to remove to get at the ore so when the scoping study of the unnamed flea comes out and suggest with a grade LOWER than the mine next door and having to remove 1.5 tons for every ton of its neighbor and also to repay money off the plant as opposed to its neighbor with 20 years or mining already its paid for ... if someone suggests to me a new mine using the same dump trucks and same recovery method which has to remove 1.5 times the material to get the ore ... is going to cost less per lb to produce I say RUBBISH.

 

Sorry but having watched this sort of dance in many things over the years ... my tolerance is not what it should be. Until a real BFS is produced the scoping study is and should be treated with extreme caution. Since GME is determined to go down this path of a low upfront cost to produce but via an untested method ... well not quite but one not used much at the moment with Nickel I am cautious as they expend their cash reserves down this path. Could and hopefully will all turn out rosy but the more the story unfolds the more cautious I become as the outside and input costs change and the finance side changes ....

 

Good example I suppose recent one is URL and its deposits. Mixed copper one with a decent grade kind of like CDU and its own. Looks great on paper a copper deposit with high grades till u look at the ore type and see the native copper. Native copper is a bitch to extract out of the ore and recovery rates are shocking ... a good one is 70%. URL led me and I suspect many along the path that they had tested this ore and come up with a fix via ultra fine milling to enable them to mix two different types of ore together and it would work. Came out eventually but not till the full BFS where half the deposits were not included and recovery rates and cost per lb were up in the top end of thing making development at best risky . Of course 2 years later copper price has held up ... but so too have the costs of production gone up ...

 

IS GME like this ? I don't honestly know. Market takes heart from laterite or lamonite deposit grades up near 2% but experience has told me the higher the grade outside a SULPHIDE deposit the more of a pain it is to process.

 

Grade normally is king with the exception of these types of Nickel deposits.

 

GME and the rest of them ... eventually they will be developed but until they produce a BFS or get funding or get a serious partner like MLX has in Jinchuan ..... hmmm. HRR has of course a partner and decent one on its other stuff but they seem to be standing still on the other assets on its books and production looked about 5 years away 2 years ago and still does.

 

All of these types ... for me were 1% of capital some a bit more ... but not much. High high spec and ultra volatile and despite the fact as I said the deposits don't grow on tree's the thing is its nice to own one as it eventually I suspect will be developed either way but in the meantime some companies make a habit of stuffing around for eons and in the end long term holders asked again and again for funds which disappear down some black hole.

 

Other thing that worries me I suppose longer term with miners nowadays is the fact that I believe irrespective of anything else the AUD eventually goes up irrespective of the USD. Our balance of payments when they finally get the extra 300 mt of iron ore on line and equiv of 400 mmboe of oil via LNG expansions and add to that expansions in coking coal and thermal coal the minus $50- billion is gone and we go to surplus in a large way post 2010-12 and as such the currency like other nations faced with decent current accounts goes up. If the USD goes down as I suspect it does will only make matter worse ... but without that the 2012 AUD rate I have plugged into models is $1.10 and if the USD has a cow ... $1.25. Too early to call the GME fate at these prices but for me the whole mining sector despite being a stronger for longer on the demand side person the rising AUD and likely falling prices in AUD terms has me being even more greedy on buying even the spec side such as MLX or GME.

 

Have fun

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i see from their scoping study they think they'll need about 1.2bill CAPEX. How would a company come up with this money? I tried to track MRE to see how they did it for their nickel JV, but got a bit lost. I saw some equity raising, but i'm not sure what the ratio to debt was. What typically happens to a share price when a company needs to raise this much capital? It looks like they could repay capex in 4yrs or so if the scoping study figures are right. Is that a good rate of repayment?

 

looking positive in any respect. I wonder if they are going to include some .8% Ni in their next trial, from what i can tell they haven't yet but are pretty confident of being able to include it in their reserve.

 

I'm definitely waiting in the wings for the next correction and looking to pick some of these up. Potentially very large upside, not a brilliant market to be trying to raise capital in, but hopefully picks up by the time they look at doing this.

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No Going Back To Murrin Murrin: And GME’s Heap Leach Nickel Project Should Go Easier On The Nerves Too

from Minesite

 

 

If not for the lower nickel price, if not for a project location adjacent to the often troubled Murrin Murrin mine, and if not for a “colourful” past, the investment world might be taking a much closer interest in GME Resources. That will change. Despite its ultra-low profile in a rattled stock market, GME has qualities which will see it emerge as a significant player in the nickel world for three very simple reasons – a vast reserve of nickel in the ground, a low-cost technology to get it out, and a board of directors who know all about tough mining projects. So far, investors are interested, but not subscribing fully to the GME story, which has its roots in the shadow of Murrin Murrin.

 

Advances in the way laterites are treated mean that GME is not be proposing to build Murrin Murrin Mark Two. If it did, everyone familiar with that saga would run screaming from the room. For any Minesite reader asleep during the 1990s Murrin Murrin was the original brainchild of Andrew Forrest, the man behind the tear-away iron ore success, Fortescue Metals. Forrest’s grand nickel-plan was to use high-pressure, acid-leach (HPAL) technology to extract metal from ore averaging around 1% nickel. Said quickly, it sounded easy. It wasn’t, and still isn’t. The company Forrest founded, Anaconda Nickel, has changed its name to Minara Resources, and while a star when the nickel price soared briefly above US$20 a pound, it’s now in the doghouse as the nickel price tumbles and the cost of the critical inputs, sulphur and power, soar.

 

GME’s exploration tenements are immediately adjacent to those of Minara. In fact, back in the 1990s a nasty, name-calling spat broke out over who promised what to whom over access to the ground. The end result was that Anaconda/Minara steamed off to develop its own project, and GME disappeared from view, but retained its tenements. Today, it’s sitting on more than 300 square kilometres of ground, into which has been punched 165,000 metres of drill core. It’s mainly shallow drilling, but that’s the nature of laterite ore. The target is to prove up 75 million tonnes of reserves at 1% nickel. If done, that means GME’s NiWest project will contain one million tonnes of nickel in the ground, with a sweetener of 85,000 tonnes of cobalt. The latest drilling results, which include a 23 metre section assaying 2.5 per cent nickel, indicate that the 1% target average will not be hard to hit.

 

“We’re confident that we have the best undeveloped laterite nickel project in Australia,” is how GME managing director, David Varcoe, sees his patch of dirt near the central Western Australian town of Laverton. A mining engineer with 20 years experience Varcoe is a new name for most investors. The rest of the GME board is better known, especially Geoff Motteram and Peter Sullivan. Motteram was a senior executive at Anaconda and has probably forgotten more about nickel processing than most people will ever know. Sullivan, meanwhile, is chief executive of the gold mining company, Resolute, which is re-developing the tricky Syama project in Mali.

 

Over coffee at Black Tom’s, a joint almost as infamous in Perth as Murrin Murrin is in the outback, Varcoe explained to Minesite’s Man in Oz the next steps that will be taken in elevating the NiWest project from concept to reality. They are: to continue drilling, and to start a detailed test to investigate whether the ore is amenable to heap leaching, a far simpler process than HPAL, and a process which Minara itself is now using, such are the savings on costs, and anxiety. The essential difference is that HPAL dissolves the ore in sulphuric acid in a pressurised, stainless steel autoclave, while heap leaching is just as simple as it sounds. Grind the ore, spread it out, sprinkle it with sulphuric acid, catch the run off, and process the liquid through what is essentially the second-half of Minara’s HPAL plant. The process will be more than familiar to followers of Aim-traded European Nickel, though that company has its own different stresses and strains to worry about. The trick is to work out whether the atmosphere in Australia is up to it in the same way as it is in Turkey for European Nickel.

 

Varcoe said that a key step in the assessment process would be the trial processing of 4,000 tonnes of ore though a plant acquired from another laterite nickel hopeful, Heron Resources. Equipment needed for the trial has been relocated from Heron’s operations near Kalgoorlie to Laverton. Testing is due to start in October. “We’ve conducted a series of laboratory tests on NiWest ore. What we now need to do is scale-up the testing,” Varcoe said. “The fact that Minara is expanding its operations with atmospheric leach adds greatly to the confidence in our project.”

 

And so it should, because Minara’s addition of a heap leach circuit is a stark admission that the HPAL process, which is also being used by BHP Billiton at its new Ravensthorpe nickel mine, is more trouble than it’s worth. Murrin Murrin was years late in completion, cost at least double its original budget, and has never achieved nameplate capacity. Ravensthorpe is also a year late and has also cost roughly double the original estimate, even given the lessons supposedly learnt at Murrin Murrin to guide the BHP Billiton construction team.

 

The proof of GME’s optimism lies in the testing that’s about to start on the Hepi orebody, 10 kilometres south of Minara’s Murrin Murrin plant. Results from that testing will be a key ingredient in a bankable feasibility study, work on which started in May. The basis of that study is a project producing between 30,000 and 35,000 tonnes of nickel metal a year, which will require the mining and processing of between 3.5 million and 4.5 million tonnes of ore. If all goes to plan, first nickel will be produced in 2012.

 

GME’s plans have attracted minimal publicity in Australia, which is hardly surprising given the painfully expensive history of trying to treat laterite ore. Over the past year, as the price of nickel has retreated to around its current US$9.50 a pound (and about the same in Aussie dollars given that parity looms), GME’s share price has contracted back from A85 cents to A27 cents. The share price slide is a worry, but it’s a problem seen many times over by GME’s board. In other words, the people running the company have seen tough times before, and they ought to know how to steer a path through the uncertainty and, fingers crossed, have GME ready for the next upswing in the metals market (fingers still crossed).

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In reply to: bvbfan on Monday 21/07/08 10:00pm

i watch gme,have traded it for 5 years,but others preferred now.

 

they had their chance,could have had a reasonable % of a joint venture, but decided to keep their own gravy chain just the way it always has been.

 

in 5 years time they will still have a large undeveloped project.

 

the world has moved on.

others preferred.

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