Economic Assessment.
To be fair, an “Eagle One” stand alone project is not viable at these metals prices of today.
(NI - $4.75, CU - $2.00, PT - $900, PD - $300, AU - $750, AG - $9)
Eagle One value today 942M in contained metals, a far cry from the $2.1 B summer NI-compliant assessment. We all know, all commodities have been taking a beating in these last few months, while projected Initial Capital outlays $173M, Operations $351M, Shipping $390M and Smelting $390M, we are looking at least $1.3 Billion expenditures.
But at the long term average metal prices, the project easily makes the mark. Keep in mind, every 10% increase in Metals prices from these low prices adds $94M to “Todays Deposit Value”.
Myself, I believe commodities are already way overdone in this sell-off, supply and demand market forces will work, see my OT, “Plunging Nickel” starting to see Nickel Producing operations going under review and even closing. For sure many of the Laterite NI deposits cannot sustain operations at this price. Supply will start drying up as demand starts to come back.
Two years minimum before the all-season road can be completed from Nakina. Good news for us, as the metals will be well underway correcting back to historical values, and will continue the next Bull phase in providing world needs, especially those of the still growing Chinese and Indian new middle class economies.
The other good news is this is just Eagle One, we still have Eagle Two, AT-12 both to early to factor into the equation and the other still not defined bodies maybe to come and still larger, the Chromite World Class, “Blackbird Deposits”.
The Initial Capital $173M outlay is my main harbinger. I’m hoping Ontario Gov’t will assist opening up this new northern frontier of Ontario and of course we have our wild card, “Windfall”. (216,250 oz AU at $800 AU is not inconceivable to finance this $173M, we have heard the $100M figure tossed about for a half interest) Share dilution still may not be much of an issue.
Overall, the plan to get started at McFauld’s receives my green light, knowing future metals prices in 2 years time will be much higher, barring the Depression scenario, in which I put little emphasis, favoring the much higher inflation forecasts in future because of the massive amounts of world liquidity capital infusions now taking place. How many Trillions? Once repatriation of the dollar diminishes, which is making the dollar look strong, real weakness is its future and the prices of everything including commodities will head upwards.
Cheers, Mark
