RE: Hart Nickel Mine NI 43-101

victor2009

3/5/2010 2:53:38 PM | | 2 reads | Post #27994021

The Press Release in my recent post appears to have disappeared, but is available under the company snapshot on Stockhouse or Sedar. The full SRK Consulting report is now available on Sedar, and is quite interesting. Among the points I noticed are the references to "open at depth and along strike" and comments that imply to me that there is some real potential for more tonnage. I also notice several references to economies that will be realized by using facilities already established for McWatters and Redstone. It is interesting how many other companies went part way in exploring this property, but it was Liberty that identified a significant resource - one that may turn out to be much more significant than indicated in this preliminary assessment.

The market reaction to this news is muted, but this is already a significant story in the company's history - mine life and feedstock for the mill are extended by years. The possibility mentioned of adding to the indicated resource by additional drilling on the inferred zones, plus extending the zones is the "sleeper" in this Press Release, in my opinion. Any additions to tonnage are significant, as these can be developed and produced without many of the fixed costs already accounted for in the preliminary numbers. In a couple of years, I think we'll hear the Hart Nickel Mine and the Redstone Mill often in reports on Liberty's growth.

In the meantime we can watch Redstone and McWatters mines begin to pay off the financings that saved the company. Until the market starts seeing how this is being accomplished, some of the significant developments (such as this Hart study) will not get the share price reaction we might think they deserve. But once it is realized that this company is a viable producer in a sound position (as far as minority shareholders are concerned), there will be some catching up to be done by the market. Those with the confidence that this will happen, may find that current share price represents quite an opportunity.

A few things to think about. McWatters and Redstone are already producing and economically viable. Both have potential for increases in mineable tonnage. Redstone mill is up and running and the major costs are behind us, any enhancements will have a quick payback in increased capacity, or recoveries from "by product" minerals. Now we have Hart, only in the preliminary stages of being measured, and already a significant resource. At this stage Hart pre-tax cash flow has been estimated to amount to a discounted present value of $56 million (undiscounted $88 million). That means that for the Hart preliminary resource, an independent consulting firm is estimating today's value at $56 million. The current share price is giving the whole company a market value of $35 million - on everything. Everything includes two economically viable producing mines, Hart mine, mill and equipment that cost around $50 million [and is likely worth much more], a significant property portfolio, largely unexplored but with some interesting prospects identified - deduct the loans and preferred shares due to the major shareholder. It has leadership that got it to this point in spite of horrific global financial and economic problems that couldn't have come at worse time for a developing company - all this being accomplished in a timeframe when some other companies haven't managed to have an economic resource identified on even a preliminary basis. One more thing, I believe the studies have all been based on US$7 Ni, and a 90 cent dollar. Right now Ni is at US$10, and the dollar at 97 cents. That difference is $2.50 per pound on multi million pounds, much of which goes right to the bottom line - nothing assured, but another possible risk/reward consideration.

No one should act on what anyone says in a chat room -but think about it and form your own opinion. I think there's some reason to think the market is undervaluing this company. The "market" is often right, but sometimes its wrong - otherwise the incentive to risk an investment wouldn't exist. My bet right now, a year from now looking back at 21 cents, we'll wish we bought more. There'll likely be opportunities around this level for a while, but at some time I think the move up will start as more people identify the potential. PDAC this week, may start a move. I think milling increase announcements in the last half of the year will accelerate things.

Something to think about over the PDAC week.