Thoughts on PIO

PIO

I thought I might put my thoughts on the currentinformation on paper.  Firstly the realised price for the caesium is a disappointment if the quantity is a pleasant surprise.  On the price, this seems to me to indicate that PIO should be moving towards production of caesium formate.   More on that later.

There are a couple of things which deserve comment.

1.                 We have an item in the cash flow reportof A$2.6m for the March quarter “Production” whatever that means.  There will be a little flow over to January from the pollucite mining but this cannot exceed $1m max.  This leaves at least $1.5 m for other production.   I can think of only two possibilities.   They may be proposing to produce feldspar, lepidolite or petalite from the existing lease or they may be proposing a very extensive drilling programme below the existing workings and on the presumed feldspar (and possibly lithium) resource within the existing lease south of current workings.  As drilling on an existing, operating mine, this would be properly described as production expenditure.  Either of these possibilities is exciting.  If they are proposing an extensive drilling programme they must be reasonably confident, from the information gained from the mining programme, that there is very likely further valuable mineral in the mine.  If they are proposing actual mining, they must be very confident of sales of the product.

2.                 Drilling at Blair is about tostart.  I understood that drilling was actually happening at the time of the AGM. Maybe I misunderstood something. However the programme now “about to start” is for 380 aircore holes and 100 RC holes.  PIO have never undertaken a programme nearly as extensive as this previously in my memory.  It is not possible to estimate the cost of this accurately, but it must be in the millions of dollars.  This tells me that they are very confident of having the funds to undertake this programme and that they firmly believe that the money is better spent here than anywhere else in their portfolio.  David is on record saying that cobalt at Blair is a Company Maker.  This expenditure is besides resuming drilling for LCT minerals at Pioneer Dome.

The price gained forthe pollucite is disappointing.  The solution is to produce caesium formate, say, at Esperence.  The process Cabot uses to produce pollucite was patented, now expired, and is public knowledge.  It is very similar to the process, patented, that LPD proposes to use to produce lithium carbonate or hydroxide, from lepidolite.   In fact I am amazed that Strategic Metallurgy managed to patent a process that does not appear novel.   I make no claim to expertise in patent law or practice. 

Anyhow StrategicMetallurgy is currently building a pilot plant in their premises to run the LPDprocess on a continuous, trial basis. This plant is designed to produce 15kg/hr and is budgeted to cost $3m.   It is due to be commissioned in April 2019.

This plant must beavailable to PIO for a pilot run to produce caesium hydroxide when it isfinished running the lepidolite.  Once you have the hydroxide it is a very simple matter to add formic acid (cost $500 a tonne) and you have caesium formate.  Ten million dollars should build a scaled up plant to produce caesium formate at the rate we are currently supplying pollucite to Cabot.