23 Feb 2011resource reserve update● NeutralMajor
The company gave an update on its 100%-owned Montanore project after finishing a Preliminary Economic Assessment (PEA). The PEA estimated initial capital costs of $552.3 million (±35%) and concluded the project has favorable economic potential justifying a resource evaluation program and pre-feasibility study; it did not update the 2005 resource estimate of 81.5 million short tons, and the filing says it should not be relied on to value the project. Permitting steps (supplemental draft EIS, biological opinion, 404 permit) are expected in 2011, with a Record of Decision possibly by end of 2011. The drilling program would cost about $20-25 million over about 18 months once permitting is done and needs external financing; 2011 cash use is estimated at $7.5 million against $10.0 million of cash and securities at December 31, 2010, which the company says must be augmented by additional financing in 2011. This sharpens the open funding question for the drilling program.