Arianne Phosphate (DAN.V) has released a maiden resource estimate on the Nicole zone of its phosphate project in Québec. The company has added an additional 78 million tonnes grading 5.34% P2O5 to its resources and is now aiming to expand this resource at the Nicole zone to anywhere between 260 million and 390 million tonnes. This could prove to be instrumental to increase the value of the Lac à Paul project, as the current mine life is based on a reserve estimate of just shy of half a billion tonnes. Should the company be able to prove up another 260 million tonnes of ore, the mine life could be extended by at least a decade which will be very positive for the net present value of the project as this could add another $3-400 million in after-tax discounted cash flows.
As the mineralization at the Nicole zone is close to surface, adding the resource estimate to the mine plan might reduce the expected strip ratio and thus enhance the economics of the project.
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Disclosure: The author holds a long position in Arianne Phosphate. Please see our disclaimer for current positions.
