RCH richfield group limited

i had the high grade core grade understated

  1. 1,057 Posts.
    Sorry, I understated the MO grade for the high grade core.

    This a list of what I have ascertained so far:

    1. The disclosed resource size is world class (top 2) in 100Mt @ .20% MOS2 (0.12%MO) with 55Mt @ 0.32%MOS2 (0.19%MO). The MOS2 numbers are after adjusting 33% for the known assay error.

    The main deposits and their average grades are:

    MO Grades

    Climax mine....0.165%..750Mt
    RCH............0.12%..106Mt (200Mt more likely)
    Roca Mines.... 0.12%...42Mt
    Malmbjerg.... 0.12%...220Mt
    Mount Hope... 0.068%..965Mt
    Lucky Ship.....0.07%...60Mt
    Ruby Creek.....0.062%.199Mt
    Moly Metals....0.06%..450Mt
    Cannivan G.....0.06%...17Mt
    Endako's.......0.051%.276Mt
    Blue Pearl.....0.043%.492Mt


    2. Most of the premier pure Moly mines have grade at around 0.05% to 0.08% MO. RCHs average grade far exceeds all but the top 4. But RCH has an unbelievable high grade core of 55mt @ .24% MOS2 or 0.19%MO which would last first 8 years production. In the first 8 years it would be the highest grade material in the world.

    3. RIO unofficially considered the resource size at least 200Mt @ 0.20%MOS2 (0.12%MO)

    4. RIO rated it world class and kept at it in the 70/80's despite an antaganistic Indonesion Mines department which in that period brought in a COW agreement that ceded 50% of mineral resources to a local. RIO is still the only company to ever buckle and sign the agreement. All other foreign companies refused. MO prices at that time also slumped to $US5lb for 10 years and this still did not stop RIO's determination to progress this top line project. It was not until RIO, after 12 months of signing the COW, started to lobby for a change of agreement to a new one that came out and was mush fairer, but the Mines department wouldn't let them off the hook and after a battle of wills, the mines department refused to renew RIO's licence. It has laid dormant for the past 25 years until 3 years ago when this deal started to be put together.

    5. The above MO/MOS2 grades are after I have adjusted for the drilling, cutting and assay errors. RIO and Santo were well aware of the consistent errors and would in about every 10 samples or so send a full core to be processed under a different method at a different lab to keep track of the error. The error they have disclosed is 33% but in fact this is considered conservative, some errors were 100% in magnitude always understating the real grade. I wont go into it right now about the water washing action down at the diamond drill face and also when cutting wash the greasy Moly out of the sample. The Assay problem was also caused by using a certain sample grinder and spectromoter.

    6. There are 34 holes drilled. By Santos and Rio. These hole delineated the shape and dip of the orebody and confirmed some very high grades and long widths etc. However many of the holes were drilled at the wrong angle in the wrong direction. That's probably typical when you are trying to work out which way things run and you didn't have access to modern geophysical techniques. To take it to JORC it will need about 40 holes at the correct angle in the correct direction, both these inputs are now well understood. i.e they know exactly where to drill, in what direction and at what angle.

    7. This is a pure Moly resource. There are no other metals in the deposit. That gives you a higher purity and lower capex as you don't need cicuits to extract the other metals. Purer Mo has a wider market.

    8. There are several satellite deposits as mention in the material released by the company. These have never been drilled but have been trenched and sampled etc. The grades is believed to match the major deposit at Anomaly B.

    9. RCH has recruited the original Santos geologist who knows the resource well.

    10. It is clear that RCH does not have the financial capacity to take this large project forward by itself. An early JV partner is a must. I reckon this is happening now and hopefully we will get an early result here rather than later.

    11. To give you an idea of what this project could make each year for the first 8 years using the current moly price and a small to medium 7.2Mt size plant ($US500M) see the following.

    $US34lb (current price)

    Net Revenue $US870,055,073
    Less Production Costs -$75,000,000
    Less Sustaining Capex -$5,000,000
    Less Interest -$37,500,000
    Less Deprection -$50,000,000
    Net Profit BT $US702,555,073

    EBITDA $US790,055,073
    Aussie $A877,838,970

    You would expect a JV partner which stumps up all the capital and expenses would be entiled to 50% of these figures. The balance is still a huge return to RCH.

    $15lb
    EBITDA $289,297,268
    Aussie $321,441,409

    12. Conclusion. If it is what RIO thought it was (>200Mt @ 0.20MOS2), then it will be the worlds second best Moly Mining operation with a very large IRR. A bonus is that most of the high grade core can be extracted by open pit mining and power can be generated by Hydro rather than expensive diesel.

    I'm keenly waiting further developments
 
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