Whats next & when?, page-10

Short answers:

Gold will be on hold for for a while, as it isn't going to be removed as overburden for some time to come and is best dealt with once KDR have cash to focus on it. Remembering that KDR retain the sole rights to it, so are unlikely to be able to get the JV to use any of it's drilling campaign to look at the gold. Once there is cash coming in the door from lithium, the gold can be looked at.

Unless it is spun off before then, but that might be too complicated. Messy to have a lot of operators involved in one small space.

The WSA deal has a 3 years earn-in period. $1.5m has to have been spent by now, and you would assume it was, and I think we'll see an update on that in the March quarterly. Expect a resource at Bounty long before an update about WSA.

Long answers:

Gold:

Here's the cross-section that shows the gold. Notice that it is south on the left and north on the right.



Also notice how the lithium is sloping up to the surface at the southern end, and that the proposed pit at the time this was drawn stopped before the Darjeeling pit.

Below is the bird's eye view of the proposed pit after the latest drilling, which looks like it extends up to the edge of Darjeeling, which will capture more gold. I've circled yellow for where the gold is and blue for where the lithium pit is going to start.



You can see pretty clearly that they intend to start down there, which is why it has seen the most drilling. As I said earlier, it is also where the ore is closest to the surface, so it is logical that they would start digging there.

That means the gold isn't going to be picked up any time soon, so they aren't going to be focused on it. I'm sure we'll get a few updates here and there, but my guess is that there will be a plan to deal with it when KDR have cash. I assume they will want to build a concentrator somewhere nearby to process it, but who knows. The point is, it isn't a priority and they have to focus on getting the lithium sorted out so they have money coming in the door.

I'd be pretty annoyed if they were spending cash on it, to be honest.

Unless it is spun out. Who knows. Just not a priority.

WSA:

Here's the terms of the earn-in from WSA:



Coincidentally, one of the directors of WSA was interviewed by Alan Kohler for the Constant Investor service last year and he mentioned that the deal was very favourable for WSA, which I can see in hindsight. KDR have to spend $9m to get to 70% ownership. That could be a very lucrative 30% retained by WSA.

Anyway, the point is that KDR have 3 years to spend the $5m as long as the first $1.5m was spent in the first 12 months. The deal was announced on the 20th March, so you would expect to have an update on this in the March quarterly, but it wouldn't be much. Probably just a line or two indicating that they've met that obligation and the rest is proceeding as planned.

Given that David Southam is still on the board and there hasn't been any rumours or newspaper articles hinting at an issue, you would assume it is all travelling along. Still, you're right that we're due for an update on it.

But I wouldn't expect much from it. Here's the map of the tenements:



That's a hell of a lot of area to be looking at. Look how close Earl Grey and Bounty are on that scale, and then remember that Bounty has barely been drilled, and is still awaiting a resource that will appear sometime this year (that could also be the next announcement). Bounty is of a lower priority than completing the drilling for Earl Grey to deliver a JORC reserve, and it is right next to where the concentrator is going to be built. It doesn't seem like a good move for them to go chasing after that stuff when there's Bounty right next door.

Texas is also closer than most of the WSA tenements and I haven't seen any updates about that.

Anyway, I think that's all of it addressed. The point I'm trying to make is that there will be plenty going on without updates. This is the boring part of investing. It's only the exploration stage that's full of tension and excitement. Once they've established what they're going to do, it's just a boring wait for them to do it.

Get the mining permits, plan the mine, source contractors, price up equipment, do the surveying, test processing recoveries, yadda yadda yadda. On and on it goes.

I'm sure there will be surprise announcements along the way that provide a nice little rush, such as offtake and financing announcements, but you just have to be patient and trust that they're getting on and getting the job done.

And there was this post I made about a month ago about this very point: https://hotcopper.com.au/threads/fu....4057306/page-7?post_id=31500889#.Ws3pOYhuaUk

Cheers