Originally posted by dunny29
Great summary, at current valuations there is potential for higher grades here, sovereign risk would have to be higher but existing infrastructure (electricity and water sources are 15km away, rail 25km) I see as a massive advantage compared to the Gabba plays which are the other 2 V's I like longer term.
One thing I disagree with though '
So value wise TNO initially looks good but the issue is the timeline. DSO is being touted by management as a way to close the gap and generate some cashflow to get to plant construction. A great concept but we'll still need a JORC, PFS, DFS, ML, several capital raises, an offtake agreement and mine built to get there'
For DSO (which still needs to be proved viable but something I am positive about happening), I think it would be very unlikely that all of those steps would need to be taken. For example SL1 (Zn/Pb in Nigeria), granted the metals are different, but there are some similarities. They completed a scoping study and 6 months later are processing ore for a DSO operation with 1st shipment possibly imminent. There operation involves a simple orebody, dig it up, crush/screen the higher quality ore and shipping concentrate. Total capex was projected $3.2mUSD (with mining services/equipment outsourced). Obviously the capex for V ore would be higher, but its going to be substantially less than a mine plus the benefits of early cashflow.
As the DSO operation would likely be processing ore to concentrate (generally not a complicated or capital intensive process), this would involve digging (orebodies are at/near surface and generally flat lying, including the pipes), grinding/crushing and putting it through the magnetic separation process to get concentrate.
I know that there is still plenty to be proved for this to happen, but IMO this could be achieved comfortably in under 18 months, possibly 12 (granted ambitious but with current prices the incentive is there). TNO has the mining licence already, if the grades/mets are proved then DSO should be a relatively simple operation that can be done quickly.
Yes DSO feasibility is a pretty easy thing to assess. SL1 is a good example. Another example is PLS who didn't do any feasibilities for DSO.
What do you need to know for a successful DSO operation?
1. Can you sell it for more than it costs to dig it out of the ground? If we can prove up pipes at 2% that is basically the grade that Gabba twins are generating 1st step concentrate at so should sell for an ok price. Literally means a buyer just has to do second stage processing to get 98% V2O5. Let's say in the current market we can even sell it for 30% payability on contract prices. Let's say contract prices are $15/lb at the moment (not sure what they actually are). So we get 2,200 (lbs) x $15 (price) x 30% (payability) x 2% (grade) = 200/t. Cut that in half again to $100/t and you are getting roughly what Li DSO is going for.
2. An ML/Environmental approvals. Obviously needed before an operation can start.
3. An Offtake - this is the key to the TNO DSO plan in my opinion. If they can find a buyer I see it as a definite goer.
4. Can we fund pre-production capital. Refer to point 3. Given pipes near surface cost should be low and offtake gives certainty.
Sorry
@Chrissyw0w forgot to reply. I hold AVL and TNO much for the same reasons as people have given. I see AVL/TMT as solid investments and TNO as a bit of a wildcard that could have big potential. AVL/TMT probably sector leaders though. AIMO.
