First time poster on this stock, and I do not hold any stock (nor have I). Just getting the formalities out of the way so those who choose to ignore me, can.
My only reason for posting here is simply to share an opinion that I have shared with friends of mine who have been in this stock and both made money and lost it.
I can't say I agree with valuations regarding IGV. This is really only a consideration once a measured JORC is in place, and a possible takeover presents itself. Otherwise, there is little value in guessing IGV as the variables far out-weigh the constants. This is not to say there is nothing to be said for IGV and that it has no place at all, it just takes a back seat.
For me, the devil is in the detail, and as with all explorers, once the initial excitement and hysteria of a discovery subsides, the sobering realism sets in and questions are rightly pointed towards development funding, even though a resource and classification is not even close to being booked.
For me, I believe, and it would be difficult to argue against, SIR at $500m (or thereabouts) market capitalization has clearly priced in a discovery, and to some extent, expectation of production. You simply cannot value an asset in the ground which has not been assessed and booked by the Department of Mines (or correct mining body), therefore the market has a clear expectation that this resource will somehow be monetized.
BHP recently wrote down $450m off their WA nickel project, and Mincor and Western Areas have both described the market as very difficult. With a weak nickel price, I find it difficult to believe that SIR will receive major funding in order to extract this resource, given they still have so much to do. I would like to know where estimates place the cost of a pre feasibility, and even a Bankable Feasibility Study. If the resource is concentrated, but remains high grade, they might get away with $100m, but it could be north of this given the size of the area. Where are they going to raise $100m? You would have to say on-market which will dilute holders, but I suppose it will be acceptable.
The real hurdle would be stage 3 - Development. I am not nickel expert, however i imagine it is similar to other metals in there is a separation and crushing facility, and possibly a chemical process. This infrastructure will be hefty. My guess on the number is irrelevant but I presume it will be quite large if comparable projects are anything to go by.
Ayway I don't wish to bore you (too late!!!), so I will arrive at the point. I believe this is a significant discovery, however to ignore the obvious challenges and pressure on the share price is what i would call foolish and naive. There is nothing to say a funding group will not be enamored by the project and stump up the cash. However I don't see people beating down the door in the immediate term.
I wish holders the best of luck. This is just my 2cents and I am by no means a nickel expert.
Thanks guys, and good luck
Resourceful
SIR Price at posting:
$2.34 Sentiment: ST Sell Disclosure: Not Held
