PDI - Predictive Discovery

[The Triangle]

I figured there had been more takeovers in the last two years in Africa but only these 3 come to mind.

• Cardinal Resources was taken over by Shandong for cash ~ $85/Resource ounce (AUD) - They had a feasibility study. Probably went too cheap.
• Oklo was taken over by B2 for shares and cash ~ $135/Resource ounce (AUD) - They didn't even have a scoping study from memory and the deposit was crummy.
• Yamana takeover by goldfields for shares fell apart ~ $500/Resource ounce (AUD) - Yamana was a producing company and had copper/zinc/silver as well (I only quickly worked out AUEq, so might be off on that one)
• If you bought Tie on market right now it would be ~$250/resource ounce (AUD) - and they're just in production.

On those valuations at the moment I still personally prefer CHZ, ORR and TIE to PDI, but we'll see what the next resource brings. I think PDI has the most resource growth upside, ORR isn't upgrading anytime soon and CHZ is chugging along slowly but has decent upgrade potential.

 

[Sean K]

I figured there had been more takeovers in the last two years in Africa but only these 3 come to mind.

• Cardinal Resources was taken over by Shandong for cash ~ $85/Resource ounce (AUD) - They had a feasibility study. Probably went too cheap.
• Oklo was taken over by B2 for shares and cash ~ $135/Resource ounce (AUD) - They didn't even have a scoping study from memory and the deposit was crummy.
• Yamana takeover by goldfields for shares fell apart ~ $500/Resource ounce (AUD) - Yamana was a producing company and had copper/zinc/silver as well (I only quickly worked out AUEq, so might be off on that one)
• If you bought Tie on market right now it would be ~$250/resource ounce (AUD) - and they're just in production.

On those valuations at the moment I still personally prefer CHZ, ORR and TIE to PDI, but we'll see what the next resource brings. I think PDI has the most resource growth upside, ORR isn't upgrading anytime soon and CHZ is chugging along slowly but has decent upgrade potential.

I haven’t looked at CHZ closely, thanks for the heads up. Own the rest but out of TIE now. It’s over the peak of the Lassonde Curve. Still early days for PDI on the value path, imo. Unless something significant changes this should by worth over $1b closing in on production.

 

[The Triangle]

I haven’t looked at CHZ closely, thanks for the heads up. Own the rest but out of TIE now. It’s over the peak of the Lassonde Curve. Still early days for PDI on the value path, imo. Unless something significant changes this should by worth over $1b closing in on production.

What will it take to move it up the curve and how long? Scoping study not expected until the end of 2023. I thought I read somewhere in one of the research reports that people were expecting 6moz on the next update, but I can't find it now. If that is the case and it comes in lower than it could make for an interesting entry point.


Maybe I'm mistaken, but has Sprott not updated their model years lately?

 

[Sean K]

What will it take to move it up the curve and how long? Scoping study not expected until the end of 2023. I thought I read somewhere in one of the research reports that people were expecting 6moz on the next update, but I can't find it now. If that is the case and it comes in lower than it could make for an interesting entry point.


Maybe I'm mistaken, but has Sprott not updated their model years lately?
View attachment 152500

I don’t think they’re trying to increase the ounces that much but want to de-risk it, do a SS/PFS and get the excise from the buffer zone to mine. Then, it’s off to the races. At least a year away. Financing and building another year. I don’t think the next MRE will provide many more ounces, maybe 200k at the edges and a hundred meters deeper that will be inferred. They haven’t drilled enough at depth from what I can tell to add much more and it’s getting thinner. They could surprise like they did with the initial MRE, but I personally think the next one will still have a 4 in front of it. It’s going to be a mine how it is. 250k pa for 15 years plus.

 

[Sean K]

I'm still reading through the MRE upgrade from a 6 Feb. I missed it as I was on the road.

My first thoughts are, WTF? The last resource was 79.5Mt@1.63 for 4.2M oz.

This is 76.8@1.69 for 4.18M oz.

The upgrade, as expected, was mostly confidence in the resource but they added 335K oz in the underground component up from about 45K. Where did the rest of the extension drilling go? How do you lose about 300K ounces from the open pit...

Compared to the August 2022 estimate, the updated Open Pit Mineral Resource estimate has slightly lower tonnes and similar grade, resulting in reduction of approximately 300Koz of contained gold. These differences are the result of the greater level of drilling data available resulting in a more detailed interpretation being able to be completed. In particular, the infill drilling has demonstrated a greater number of internal higher and lower grade structures as well as restricting the distance that grade shells are extended past the edge of the dataset.

So, disappointing, to say the least. I suppose when you go from Inferred to Indicated you definitely get a better understanding of the model, but to lose 300K is a very big chunk.

Only real positive is that there's a big chuck of the deposit not included in this between the open pit and the top of the UG model due to a lack of drilling. That will be filled in and add ounces. Maybe another 200k.

But, geesh. I'd be sacking the dudes that did the inferred MRE.

SP being hit accordingly.

Having said that, it's still going to be close to a 5M oz deposit and still cheap on comparison of in situ value compared to peers.

Will be interesting to see what Sprott have to say. I think they'll be very disappointed.

 

[mullokintyre]

I'm still reading through the MRE upgrade from a 6 Feb. I missed it as I was on the road.

My first thoughts are, WTF? The last resource was 79.5Mt@1.63 for 4.2M oz.

This is 76.8@1.69 for 4.18M oz.

The upgrade, as expected, was mostly confidence in the resource but they added 335K oz in the underground component up from about 45K. Where did the rest of the extension drilling go? How do you lose about 300K ounces from the open pit...



So, disappointing, to say the least. I suppose when you go from Inferred to Indicated you definitely get a better understanding of the model, but to lose 300K is a very big chunk.

Only real positive is that there's a big chuck of the deposit not included in this between the open pit and the top of the UG model due to a lack of drilling. That will be filled in and add ounces. Maybe another 200k.

But, geesh. I'd be sacking the dudes that did the inferred MRE.

SP being hit accordingly.

Having said that, it's still going to be close to a 5M oz deposit and still cheap on comparison of in situ value compared to peers.

Will be interesting to see what Sprott have to say. I think they'll be very disappointed.

View attachment 152999

View attachment 153000

I think it was due to some shifting of the open cut versus underground mining.
I assumed that the open pit was not going to be as deep, and the original 300k has not shifted, just become part of the underground.
They could also shift the pit a little more to the north West and gobble up some of the higher grades in the initial stages rather than getting those grades two or three years down the track.
Still reckon its worthwhile investing in, particularly with the recent falls in SP.
Mick

 

[Sean K]

I think it was due to some shifting of the open cut versus underground mining.
I assumed that the open pit was not going to be as deep, and the original 300k has not shifted, just become part of the underground.
They could also shift the pit a little more to the north West and gobble up some of the higher grades in the initial stages rather than getting those grades two or three years down the track.
Still reckon its worthwhile investing in, particularly with the recent falls in SP.
Mick

Yes, it's still cheap on just what they've got, IMO. Will be a mine and will be producing over 250K pa. Just as long as they get the excise from the buffer zone in the NP. Not in the bag, which is why I think it's cheap.

I think they might end up with a 3Moz reserve which at spot is worth $18b ... I think. Check my maths. 3M oz at 250K pa is 12 years life at least. Once they add in the underground to a reserve down the track that could be about 4Moz = 16 years.

Then there's the regional exploration which looks like there's more deposits to add.

DEG currently have a 5M oz reserve, at the same grade, larger capex required, and they're on a $2.2B MC. PDI currently $330m ish. Doubling the MC while still in exploration, early development, is not out of the question. Simple comparison, but I think it's fair.

Yes, WAf v WA, but I reckon there's less red tape in Africa than WA. It's just a perception thing.

(There'll be another coup next week now)

 

[Sean K]

Sprott have actually increased their PT on this to 55c by lifting their discount to NAV by .1 due to increased confidence in the deposit.

Future PT around $1.00 even after being fully diluted for Capex.

Additional UG ounces will definitely appear once they fill in the gap between the red and purple blobs. The purple blob is about 300k oz so there looks to be another 200k or so in there. Still open at depth.

One thing that is a bit weird is that the pit shell size didn't change even though they clearly had several extension hits outside the last pit shell model. Not sure why they couldn't have included those, even into an inferred category. Maybe next time after there's more infill around the edges.

 

[mullokintyre]

Picked up a few more at 0.165 this morning, seems to be good value at these prices.
May well go lower, but long term it looks the goods.
mick

 

[mullokintyre]

Picked up a few more at 0.165 this morning, seems to be good value at these prices.
May well go lower, but long term it looks the goods.
mick

Perhaps a bit lucky in the timing.
Overnight, PDI released some infill drilling with good grades that will allow it to increase the level of indicated from inferred before it releases the MRE.
That mining open pit profile may change again.
Given some of my recent duds, a sigh of relief to get something as a small positive.
mick

 

[Sean K]

PDI is going to go through a low exciting news cycle for a while I think. Just firming up the current resource for studies and permittings. The only growth will be the gap between the pit shell and the UG blob which might add an extra 200k oz. But, if like the last update they better define the top half to some Measured, it might even cut out some of the inferred material around the indicated and below. So, mightn't add any ounces just upgrade it for the ML down the track. Maybe some of the exploration drilling could excite, but it didn't really in the past and it's not the focus.

As expected, Sprott was part of the site visit mentioned above and their thoughts below.

 

[Sean K]

More good infill to upgrade the lower half of the deposit to indicated. Not sure why they're not drilling the small blob to the North that needs to be upgraded and it's shallow. Need more holes in the gap between the pit shell and the UG resources as well to fill it in. Hopefully another couple of hundred thousand ounces in the next MRE and at least 75% indicated, maybe some measured. Quicker they get a scoping study done, environmental clearance, excise from the NP and mining permit the better.

 

[Sean K]

No PT upgrade from Sprott on the above ann, of course. Just infill for upgrade.

I like comparisons to try and find value in the gold market. While there's hardly ever an apple for apples comparison it can shine a light on things that may be re-rated down the track well to the upside. Sprott do this now and then and they do a simple comparison with this in the future in production to PRU and EDV. Should triple pretty easily from here on their analysis.

 

[Sean K]

I'm getting a bit peeved with ASX companies releasing 'market sensitive' information, which is clearly not. They've already told the market several times what their plans were for the upcoming months and now they release this just to tell us they've started. "Hey, look at me!" Arghhhhhh. ASX should put a stop to this self-ramping.

 

[peter2]

Well @Sean K the "news" seems to be getting some punters excited. I notice consecutive HVBBs on the charts. Considering a spec position in PDI but seems it may take the rest of the year to "revalue".

 

[Sean K]

Well @Sean K the "news" seems to be getting some punters excited. I notice consecutive HVBBs on the charts. Considering a spec position in PDI but seems it may take the rest of the year to "revalue".

I'm glad you're seeing something positive in this chart Pete. The last 2 weekly candles are ok. Maybe the start of something. 15c and around the bottom of this chanel was potentially a bottom.

My average price 19c, so I need some ramping from somewhere to get it going, thanks.

Though, I could be in a wheelchair before this stock goes anywhere.

 

[mullokintyre]

Quarterly out, makes some sober reading.
They have 1.4 quarters of cash left, so will have to have a cap raising soon, despite the statement

The resource looks good on paper, and if all goes well will produce a lot of gold at a hopefully low AISC, but we will not know any of those projected figures till the feasibility study comes out.
So despite the reassurances , it matters little as to the timing, whether it is in this quarter or the next.
Debt financing is pretty much out of the equation now that credit has been tightened significantly.
The question is, how much of a discount will be offered to the sopistos to get them on board?
Mick

 

[Sean K]

Quarterly out, makes some sober reading.
They have 1.4 quarters of cash left, so will have to have a cap raising soon, despite the statement
View attachment 156244
The resource looks good on paper, and if all goes well will produce a lot of gold at a hopefully low AISC, but we will not know any of those projected figures till the feasibility study comes out.
So despite the reassurances , it matters little as to the timing, whether it is in this quarter or the next.
Debt financing is pretty much out of the equation now that credit has been tightened significantly.
The question is, how much of a discount will be offered to the sopistos to get them on board?
Mick

I wonder how much they'll be asking for. Perhaps enough to finish the Scoping Study and put the ML application in. Not sure how long the permitting will take. Might depend on how much they put in the Aldi bag to the key government ministers for approval. Not sure how much $$ they'll save by cutting the rigs. A few million, so maybe expenditure of $8-9m this quarter. Looks like DFS is contingent on getting the permitting sorted mid next year. A long way to go.

 

[Sean K]

PDI was 'well funded' in their May presentation.

Not well funded enough.

They were always going to need to do a CR in the next quarter or two, but why spin it... same old same I guess.

 

[Sean K]

$40m @ 15c. Hopefully that takes them to getting the entire open pit to M&I, links the blob in the UG to the OP adding 200k oz and they find something new. Hopefully the resource update in H2 links the blob. This should get them to the end of permitting and a ML. Once permitting is sorted, probably taken over.