Prairie Downs Metals (PDZ) - Base Metals Minnow

[Huang Chung]

Tricha, if China has gone ex-growth, why then are you so interested in oil?

[tricha]

Tricha, if China has gone ex-growth, why then are you so interested in oil?

Oil like coal, it is finite. Nearly all the easy to get oil is gone.

Steel, nickel, copper, lead, gets reused.

[Huang Chung]

Oil is down $50 from its peak....I don't think peak oil is the burning issue of the day.

[FarmerGeorge]

Obviously base metals are not flavour of the month just now but I'm not sure we require a resource boom or super cycle to justify an investment in PDZ at these levels.
Short term there is little risk to the company as there's cash on hand and little or no debt (not sure on this but I think it's $0).
There's certainly short term risk to the share price which I believe reflects long term issues: trying to get production going in a credit constrained environment, a global economic slowdown bringing the price of zinc 'a-tumbling down', sourcing production expertise, and of course the potential for some disappointing drilling results.
So we shouldn't look at this with rose tinted spec's, not accusing anyone of that of course, except maybe me on some days!
Bottom line is that there is a lot of zinc here, possibly a lot of copper, and it's all fairly easily extractable. This will be a low cost mine (if it gets going in the first place of course) and stockpiles are not particularly high. I'm still holding plenty though so pretty biased I admit!

[Huang Chung]

Guilty of looking at this one with rose tinted specs George.....but I do acknowledge the extra risk in the current environment.

This stock seems to have a bit of a fan base in NZ, with 5 of the top 20 shareholders having New Zealand addresses (as disclosed in the top 20 shareholder list dated 31 July on the PDZ website).

[FarmerGeorge]

Interesting HC but I can assure you I'm not one of them!

[FarmerGeorge]

Although after a bit of a buy up yesterday I might be getting close!
No, not really but I do have a few more than I did last week. Let's just see how all this global liquidity pumping pans out.

[Huang Chung]

If we can work though these terrible metal prices FG, I'd say you've grabbed yourself a bargain.

Haven't bought any more of late, but haven't sold any either.

[njat]

Are we ever going get some news of the current drill campaign, starting to worry that no news is bad news.

[Huang Chung]

Are we ever going get some news of the current drill campaign, starting to worry that no news is bad news.

Yes Njat, it's taking a while.....but I'm not going to draw any conclusions until I see the results.

[FarmerGeorge]

Vanadium is a soft and ductile, silver-grey metal. It has good resistance to corrosion by alkalis, sulfuric and hydrochloric acid. It oxidizes readily at about 933 K (660 C). Vanadium has good structural strength and a low fission neutron cross section, making it useful in nuclear applications. Although a metal, it shares with chromium and manganese the property of having valency oxides with acid properties.

Due to the fact that Vanadium has such high resistance to corrosion, it is used to form steel alloys or ferrovanadium. About 80% of Vanadium is used as this steel additive to help prevent rust and strengthen the steel. Vanadium is added to many high speed tools and cutting objects. It is also often times added to engine parts such as the axles, crankshafts and gears in cars.

Spot price of Vanadium in 2007 = USD40/kg
Spot price of Vanadium in Feb '08 = USD80/kg

Current spot price = USD55-65/kg

[Huang Chung]

Vanadium is a soft and ductile, silver-grey metal. It has good resistance to corrosion by alkalis, sulfuric and hydrochloric acid. It oxidizes readily at about 933 K (660 C). Vanadium has good structural strength and a low fission neutron cross section, making it useful in nuclear applications. Although a metal, it shares with chromium and manganese the property of having valency oxides with acid properties.

Due to the fact that Vanadium has such high resistance to corrosion, it is used to form steel alloys or ferrovanadium. About 80% of Vanadium is used as this steel additive to help prevent rust and strengthen the steel. Vanadium is added to many high speed tools and cutting objects. It is also often times added to engine parts such as the axles, crankshafts and gears in cars.

Spot price of Vanadium in 2007 = USD40/kg
Spot price of Vanadium in Feb '08 = USD80/kg

Current spot price = USD55-65/kg

Copper results are disappointing. Hansen did say though that the drilling hadn't found the source of the mineralisation.

Vanadium looks interesting, but probably more questions than answers at this stage.

[foxysfolkfaced23]

yes those results were very underwhelming - i was waiting weeks/months for these results and we get fractions of 1% copper :rolleyes: meanwhile shareprice has plummeted

i realise still early days with regards to copper so will wait and see and hope for something bigger in the future once they hit the source (if it exists??)

still have znic/lead announcements to come so but the results are coming painfully slow (mid/late november!!)

having said that i may look to accumulate more if the shareprice goes much lower as i dont think the sp will be heading north anytime soon based on the lastest announcement and the state of the general market

Vanadium - hey if they can mine it for a profit in decent quantitys then its all good - a bit out of left field though to say the least.

[Huang Chung]

George, Foxy, Njat,

You may find this paper on zinc interesting.

http://www.kitco.com/ind/Lee/oct202008.html

[tricha]

Copper results are disappointing. Hansen did say though that the drilling hadn't found the source of the mineralisation.

Vanadium looks interesting, but probably more questions than answers at this stage.

Drill results poor, cash at 11 cents a share, best to shut up shop, theres no way that PDZ are going to mine anything for a very long time, if ever.

Hey H, even Mincor would be too risky at todays nickel price and they have 100 million cash and outstanding mines.

This supercycle is a fizz. :(

[Huang Chung]

Drill results poor, cash at 11 cents a share, best to shut up shop, theres no way that PDZ are going to mine anything for a very long time, if ever.

Hey H, even Mincor would be too risky at todays nickel price and they have 100 million cash and outstanding mines.

This supercycle is a fizz. :(

The market is currently valuing 295,000 tonnes of zinc, 83,000 tonnes of lead and 2.6 million oz of silver at next to nix, and that's before the resource upgrade comes through before year's end.

Who knows if they will hit economic copper and vanadium, but with about 5 km and 3.5km respectively of strike and only 5 drill holes (all mineralised) to date, you'd think they'd have a very good chance of adding even more to their resource base. Diamond drilling at Costean 7 was probably a mistake, but as I understand it, was an opportunity they took when a rig suddenly became available when rigs of any discription were pretty much booked out. They will now continue testing along strike with an air core drill, which is more logical and less costly.

Very early days for vanadium, but the grade of the samples were too high for the lab to even properly measure! Maybe just a couple of lucky finds, or maybe something more...who knows??

Reasonable cash at bank to continue their exploration program.

Why on earth would they want to shut up shop T?

[Huang Chung]

i suppose our former director is off loading his shares now that his resignation is announced............19c at the moment.

Foxy...latest top 20 shareholder list shows that Hansen hasn't sold a single share.

[foxysfolkfaced23]

Foxy...latest top 20 shareholder list shows that Hansen hasn't sold a single share.

i see thats good then

hopefully they have enough cash to keep up a decent amount of drilling so as to improve their resource base but also survive until prices turn the other way

if you look at the historical inventories of zinc/copper etc its still extremely low at the current time. zinc price shot up quickly 2/3 years ago and has come down just as fast - and yet inventories are still low?

[tricha]

i see thats good then

hopefully they have enough cash to keep up a decent amount of drilling so as to improve their resource base but also survive until prices turn the other way

if you look at the historical inventories of zinc/copper etc its still extremely low at the current time. zinc price shot up quickly 2/3 years ago and has come down just as fast - and yet inventories are still low?

China will soon be a net exporter of zinc again, all zinc producers and want abees are screwed beyond belief.:eek:

China reduces dependence on import of key minerals http://digg.com/img/badges/80x15-digg-badge-2.gif (http://www.chinamining.org/digg/submit.php?url=http://www.chinamining.org/News/2008-10-24/1224826460d18483.html)
(www.chinamining.org)
Updated: 2008-10-24 13:30
Counter: 287

China has eased its dependence on the import of key minerals in recent years thanks to more exploration discoveries and expanded mining capacities, according to Wang Min, vice-Minister of Land and Resources.

Now, China's lead-zinc production has met its market demand.

China imported 51.7 percent of iron ore consumption in 2007 and is expected to see lower weight of the import of iron ore this year.

The dependence on imported potash minerals dropped from 90 percent in 2001 to 70 percent in 2007, after the discoveries of chromite and nickel deposits.

Wang said that a large number of new deposits would be identified in the future as more than 70 percent of Chinese territory remain intact.

Statistics show that China has discovered 1,202 deposits since 2006. Included are 194 large-scale ones and 240 moderate ones.

[njat]

Thanks for the link to the article on Zinc, i think it makes a very balanced arguement for why prices will not stay in the toilet for years to come hopefully. As they say nothing cures high prices like high prices and I think the same can said for low prices. With Zinc prices so low it is not worth producing it which will eventually lead to a shortage of supply and higher prices. Therefore being a non producing explorer in time of low prices is not a bad thing as they are unaffected by the low price. So if PDZ can surve the 18 months or so and find some more metal the SP could bounce massively as we have seen in the past.

[Huang Chung]

$6.8m still on hand at the end of the quarter. With all the drilling that's been happening, that's a better cash position than I was expecting :).

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00898024

[Huang Chung]

George, guys...

Just talking to a metallurgist mate of mine on the phone, and read out parts from the PDZ quarterly concerning vanadium. He commented on one specific bit....


Vanadium enriched carbonitised volcaniclastics and a barite unit are unconformably juxtaposed with Zn/Pb/Ag mineralisation, in veins hosted by mafic intrusives and volcanics. The carbonistised volcaniclastics and barite cap, outcrop over approximately 4 kilometres. Vandium grades above detection limits (>1%), as proffered by an independent laboratory (ALS Laboratory). Absolute vanadium concentrations are not reportable due to the specialised nature of the samples and very high grade. At this stage preliminary investigations suggest the vanadium to be extractible by conventional methods. Preliminary and independent mineralogical analysis by "Roger Townend and Associates", described samples as mottramite and vanadinite (both of which are vanadium ore minerals) in spatial association with copper minerals such as chalcocite, malachite, covellite, bornite,
digenite and chalcopyrite, in addition to barite.

Firstly, that geologists talk a lot of crap (making simple concepts sound oh so technical), but secondly and most importantly, that it sounds like the vanadium is in with a lot of sulphides, and therefore should be extractable through normal floatation. The specifics of the ore body would dictate whether you could produce a vanadium concentrate, or have vanadium credits in say, a copper concentrate.

I was assuming some other extraction process was required to get the vanadium out....maybe not :). Anyhow, that's my understanding of what he was suggesting, based on the limited information available, of course.

Bottom line though still must be whether there are economic quantities of vanadium, copper or whatever along strike from the Main, Zed and Gabbro lodes. We know the minerals are there, it's just the concentrations that we don't know about. It does, however, sound hopeful that the vanadium might make any concentrate produced that much more valuable, even it it just helps in covering some of the production costs.

Hopefully the upcoming aircore drill program will give us the leads we are looking for.

[FarmerGeorge]

Good on you for digging in to this one a bit deeper HC (no pun intended). I maintain this is a wonderful little company, if only people would pay a bit more for their goods! Haha, plus of course there's the issue of who pays for developing the mine.
I see these as the big risks, have managed to convince myself that the deposit itself is going to be fantastic.

[foxysfolkfaced23]

Good on you for digging in to this one a bit deeper HC (no pun intended). I maintain this is a wonderful little company, if only people would pay a bit more for their goods! Haha, plus of course there's the issue of who pays for developing the mine.
I see these as the big risks, have managed to convince myself that the deposit itself is going to be fantastic.

completely agree, i dont think things can get too much worse for a potential zinc/lead miner (and hopefully copper) - with prices currently so low and every man and his dog is saying that zinc is stuffed maybe now is the time to buy in and hold for the future or the next wave which may be some years away yet - i dont mind waiting

like you farmer george i think i believe that there is so much more to be discovered in their deposit and im looking forward to future drilling results/campaigns

so thats why on yesterdays weakness i have doubled my holdings of pdz - i bought in at 13c which is a fraction of what i paid for my last bundle :o

[Huang Chung]

completely agree, i dont think things can get too much worse for a potential zinc/lead miner (and hopefully copper) - with prices currently so low and every man and his dog is saying that zinc is stuffed maybe now is the time to buy in and hold for the future or the next wave which may be some years away yet - i dont mind waiting

like you farmer george i think i believe that there is so much more to be discovered in their deposit and im looking forward to future drilling results/campaigns

so thats why on yesterdays weakness i have doubled my holdings of pdz - i bought in at 13c which is a fraction of what i paid for my last bundle :o

As I've said before, the more zinc production that gets shut down, the more chance that the supply response to the low zinc price will overshoot, and be followed by a sharp snap back rally. It will be interesting to see if the scenario actually plays out.

[Dr_Who]

Have you guys compared PDZ with OZL? I ve been keeping an eye on OZL for some time and have not yet dipped my toes. I will buy these one day.

[Huang Chung]

Have you guys compared PDZ with OZL? I ve been keeping an eye on OZL for some time and have not yet dipped my toes. I will buy these one day.

Chalk and cheese Dr. Who.

OZL is an established multi-mine mid-sized base metals producer, whereas Prairie Downs is a one project wannabe.

Worst of times for hopefuls like PDZ, and only suitable for the true believers (or dreamers :rolleyes:), who appreciate what the risks are.

[foxysfolkfaced23]

Worst of times for hopefuls like PDZ, and only suitable for the true believers (or dreamers :rolleyes:), who appreciate what the risks are.

i didnt realise that by buying these that i had become part of a cult ;)

[Huang Chung]

i didnt realise that by buying these that i had become part of a cult ;)

Foxy, I think this cult could fit all its members into a phone booth :(.

Mark Hansen has also let go of a few shares. I can understand that he might do that if he's between gigs, but will be worth keeping an eye on all the same.

[tricha]

Foxy, I think this cult could fit all its members into a phone booth :(.

Mark Hansen has also let go of a few shares. I can understand that he might do that if he's between gigs, but will be worth keeping an eye on all the same.

CBH cuts zinc output by a third

Australia’s CBH Resources will cut zinc output by a third and review plans to takeover Perilya Ltd., due to falling zinc prices.
Author: James Regan
Posted: Friday , 07 Nov 2008


SYDNEY (Reuters) - st1\:*{behavior:url(#ieooui) }
Australia's small CBH Resources Ltd will cut output by a third and review takeover plans for rival Perilya Ltd, it said on Friday, as a dramatic fall in zinc prices has rendered half the world's producers unprofitable.
CBH Managing Director Stephen Dennis told Reuters in an interview that CBH, which also is laying off half its staff until zinc prices improve, had "some concerns" over its all share offer for Perilya, which has already nearly halved output amid a rapidly deteriorating global zinc market.
"Following the release of Perilya's quarterly report we do have some concerns about where they are going with their own financial position," Dennis said.
As a result of tumbling prices, CBH will cut ore production by 30 percent to 658,000 tonnes in the 12 month period to June 30, 2009, reducing zinc concentrate output to 78,200 tonnes lead concentrate production to 38,700 tonnes, Dennis said.
While those sums are small for a global zinc market of 11 million tonnes a year, they will help whittle down a supply surplus that threatens to expand this year as the worst global financial crisis tilts the world into recession.
Zinc MZN3, mostly used as an anti-corrosive in galvanised steel, sells for around $1,120 a tonne at the London Metal Exchange, less than half the price in January.
"We've got at least 50 percent of world zinc production under water at present," Dennis said.
In its quarterly report on Oct 31, Perilya projected its cash operating cost should average between 60 and 65 U.S. cents per pound of zinc from January 2009, above the current market price of around 50 cents a pound.
"We'll be continuing to review our position as we go forward, Dennis said. "But we are going to issue our bidder's statement next week."
CBH announced earlier on Friday that falling prices would also force it to cut its staff to 115 people from 233.
OFFER WORTH A$44 MILLION
CBH on Oct 2 said it would only offer 2.8 of its shares for each Perilya share if Perilya completed the sale of its Mount Oxide copper mine project in Australia, but 4.2 of its shares per Perilya share if it held on to the project.
The sale of the project collapsed last week.
The 4.2-for-one offer is worth around A$44 million ($29 million) based on CBH's closing share price of A$0.052.
Perilya's board is advising shareholders not to take action until it makes a recommendation on CBH's offer. CBH and Perilya terminated a friendly merger proposal just over two months ago.
The idea behind the latest merger proposal is to reduce costs by combining Perilya's ageing Broken Hill zinc and lead mines in eastern Australia with CBH's adjacent operations, helping sustain operations through the current downturn.
Bigger operators are also considering taking action, with Oz Minerals Ltd considering a full or partial closure of the Australian Century zinc mine the world's second largest.
Kagara Ltd, has already cut its 2008/09 zinc target by 12.5 percent to 35,000 tonnes and warned it might not meet an annual target of 100,000 tonnes of zinc in about two years.
CBH sells its lead concentrate to the Nyrstar NVR.BR-owned Port Pirie smelter near CBH's mine, while the zinc concentrate is divided between a Nyrstar smelter in Risdon, Australia, and Asian buyers, Dennis said.
"We don't want to close the operation at this point because we do believe the fundamentals are such that there will be a recovery in due course," Dennis said.
"But we certainly can't continue to produce metal at a loss, so we minimise our production and stay in the game," he said. (Editing by Lincoln Feast) ($1=A$1.50)
© Thomson Reuters 2008 All rights reserved

[Huang Chung]

Tricha, I understand that only about 15% of zinc mines are making any money at the moment. Only a matter of time for production to get shut down on a bigger scale than we've seen to date.

The current price is quite simply unsustainably low, but nobody knows the amount of pain producers who continue to struggle on will have to endure between now and when the rebound in price happens.

[Huang Chung]

Interesting article written in August....and zinc prices have come off even more since the article was written.

http://www.kitco.com/ind/Coffin/coffin_nov042008.html

[tricha]

Tricha, I understand that only about 15% of zinc mines are making any money at the moment. Only a matter of time for production to get shut down on a bigger scale than we've seen to date.

The current price is quite simply unsustainably low, but nobody knows the amount of pain producers who continue to struggle on will have to endure between now and when the rebound in price happens.

In your dreams Huang, China will be a net exporter of Zinc again :o

China will have Zinc coming out of it's ears. :(:(

[Huang Chung]

[quote=tricha;233572]In your dreams Huang, China will be a net exporter of Zinc again :o

China will have Zinc coming out of it's ears. :(:([/quote

So western zinc producers will close because of the low price of zinc, but Chinese mines, apparently unaffected by the low price, will now become exporters of zinc??????

Lets face facts...I'm never going to convince you, nor you convince me.

[Huang Chung]

BLOCKQUOTE {MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 0px; PADDING-TOP: 0px}"Long-Term, Prairie Downs Has Exciting Potential In Vanadium; Short-Term It's A Good Job That Mine Development Work Is On Hold"


By our Man in Oz - minesite.com

It's not often that you can look at an emerging base metals miner and think how fortunate it is that a commitment to a mine development hasn't been made. But a perfect example of what might be called a financial near-miss comes from the experience of small Australian explorer, Prairie Downs Metals. A few months ago, Prairie Downs Metals came close to proceeding with development on the Prairie Downs silver-lead-zinc project near BHP Billiton's big Mt Newman iron ore mine in Western Australia. If it had, Prairie Downs, both the company and the mine, would be struggling to make ends meet in an extraordinarily depressed market for all metals. Instead, the company has been able to re-organise its affairs and continue with a resource upgrading exercise and an exploration programme which continues to reveal tantalising indications of additional mineralisation, and all with enough cash parked in the bank to ride out the global financial storm.

"The downturn has certainly prompted us to wind back our drilling programme, but not lose sight of the potential," says Prairie Downs director, Alex Pismiris. He explains that the primary objective of current work is to boost the high-grade component of the orebody. "We're targeting a resource to support a minimum of five years of high-grade production," he says. "Conceptually, we can see expanding the resource from 1.6 million tonnes to between two and 2.5 million tonnes of material grading between 8 and 12% zinc, between 1 and 2% lead and between 10 and 20 grams of silver a tonne. But, to get those numbers we need to carry out more drilling and resource studies, and get the results from a lot of drill core still waiting to be assayed."

While work continues on the silver-lead-zinc potential of Prairie Downs, the company's geologists have also picked up the first sniffs of what might be a world-class vanadium structure within the main project area. In mid-October Pismiris re-kindled interest in the company with a brief report outlining the presence of unusually rich vanadium mineralisation. Surface sampling which followed preliminary x-ray fluorescence analysis yielded rocks grading more than 1% vanadium over a 3.7 kilometre strike.

"The problem we've had with the vanadium is that local laboratories couldn't handle the material because it was above their detection limits," Pismiris says. "They're sent the material to Canada where it can be tested. We're waiting on the results, but we suspect the samples are in the order of 2 to 3% vanadium." If that estimate is right it would be one of the world's richer vanadium structures. The Windimurra mine to the south of Prairie Downs assays at around 0.46% vanadium and the best mines in the world, on South Africa's Bushveld, assay 1.5%. "We need to gather a lot more data on the vanadium before we know whether we're on to something significant, but it's certainly encouraging so far," Pismiris continues.
Perhaps of more immediate interest, though, is the potential of the company's zinc business which, at the last global estimate, currently stands at a resource of 4.7 million tonnes of material at a grade of 6.3% zinc, 1.8% lead and 18 grams of silver a tonne, using a 1% zinc cut-off. Given the crash in the zinc price, and slightly smaller crash in the lead price, it is a good thing that Prairie Downs did not proceed to develop what would now look to be a rather skinny project. "What we've outlined so far represents a resource of 295,000 tonnes of zinc and 83,000 tonnes of lead, but we need more of that, or more of the higher grade material, to go the next step towards development," Pismiris says.

He continues by explaining that the company plans to release an upgraded resource estimate soon, based on the most recent drill results. "We still have a lot of core in assay labs," he says. "It'll probably take a month or two to catch up with the assay work. But once we get that data we can plug the numbers into a model and spit out a new resource number. We're reasonably confident that we will grow the resource quite significantly, especially of the high-grade material."

"The work underway on site now is really to test the mineralisation along the Prairie Downs fault," he says. "But, rather than hitting that with a diamond rig or RC we're looking to cut costs by using a smaller, lightweight, air-core rig. That work will test the depth of vanadium mineralisation along strike, as well as giving us more information on the zinc and lead. We're still exploring, but at a much lower spend." Pismiris says the work to date has only touched on part of the main fault zone, but has nonetheless revealed a number of mineralised hot spots. "Our goal has always been to prove up the main lode, and then step out from there once we get a substantial resource."

For investors the key messages coming from Prairie Downs are that it is close to having a mine, but not yet close enough, especially in this environment of low metals prices. Indeed if the company had decided to follow through on the results of a feasibility study that was completed in the June quarter, it might now be in a spot of bother. That study found that a project processing 500,000 tonnes of ore, expandable to one million tonnes, would have a capital cost of around A$86 million. It included a detailed mine plan, costings, and a development schedule pointing to a production start-up at the end of 2010. A few weeks after the release of that report Prairie Downs started a senior management change process, which ended with the 2nd October resignation of managing director, Mark Hansen, and the start of a search for his replacement, with Pismiris in charge until a full-time replacement is found.

On the market, Prairie Downs Metals has suffered the same as other base metal explorer/producers. Since peaking at A$1.40 at this time last year, the stock recently slipped to a low of A11 cents, a price which values the business at an untaxing A$8 million, not much above the cash backing of A$6.8 million. In other words, each dollar in market capitalisation is backed by about A85 cents in cash, with the Prairie Downs orebody assigned limited value - a reflection of the current state of the overall market, but certainly making Prairie Downs a stock to keep an eye on as markets settle.

[foxysfolkfaced23]

i found a small insignifaicant grain of hope in the vast ocean of dissapointment for those invested in a zinc company, like myself :)

http://www.commodityonline.com/news/Global-Zinc-consumption-may-drop-to-10-mt-14562-3-1.html

quote from the above article:

"Zinc seems to have found some support given the production cuts to date, while lead is taking a knock from falling global car sales. We believe zinc has the strongest fundamental outlook of all base metals in the long-term, as mature mines close and little is in the pipeline to replace lost supply.

Mine closures to date will also tighten up concentrate supply and could see the metal recover rapidly once a turning point in the global economy is reached."

[Huang Chung]

G'day Foxy,

Yeah, I'm still confident of a nice rebound in the price of zinc...question, of course, is 'when'.

The Good Ship Prairie Downs seems to have been a bit rudderless since Captain Hansen fell overboard. Still waiting on assay results for the latest round of drilling in the Main Lode and along strike....now well overdue.

Quarterly should be out tomorrow or Monday.

[Huang Chung]

North American article that seems very applicable to Prairie Downs....$1.40 to 6c.


http://www.kitco.com/ind/baker/jan152009.html

[Huang Chung]

Quarterly out.

I think we are now defining the upper limits of the zinc/lead mineralisation at Prairie Downs.

Aircore drilling along strike did not offer too many significant leads, although they must a hit a rich vein at Kerr's Find with one of the drill holes. Maybe some potential, but not a priority in my opinion. Vanadium appears to be limited to the surface....no joy on that front.

Main lode also seems to be narrowing at depth....nice grades, but just not the width that would get one's heart racing.

However, a couple of beautiful intercepts in the main lode at very shallow levels.

Looks like we might have ourselves a nice, shallow (say, surface to 250m) medium to high grade resource of around 2 million tonnes, give or take. Not a big system as I had hoped, but decent all the same.

Still around $5m in the bank as well.

What do you think Foxy?

[foxysfolkfaced23]

i must admit i was hoping for a bit more than that myself out of the drilling results

shame about the vanadium as im sure that would have set alight some interest

so $4.8mil left in the kitty, how long will that last? 4 quarters? maybe up to 8 quarters, i dont know myself.

and crucially, when will we see a recovery in zinc prices in these extreme uncertain times and the economy as a whole? nobody really knows. some people say late 2009 others are saying this could go on for a long time yet.

timing could be an issue and is my major concern, as im prepared to wait for many years for these to come right - but problem is will pdz be still around/afloat to see those times?

i hope they will be :cool:

[Huang Chung]

Finally, we have ourselves a new Managing Director....a Rugby player as well, but I won't hold that against him.

Piss poor exercise price with the options though......

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=437132

[FarmerGeorge]

Hi guys, haven't been on this forum for a while but still holding plenty of these. Agree wholeheartedly on those options HC - pretty lame exercise price. Also interesting to note this latest guy seems much more of a financial type than a mining guy.

[Huang Chung]

Yes FG, I prefer mining guys leading the charge as well, but if there ever was a finance guy to run the show, now would be it.

Sincerely hope the quality of the reporting improves....it's been woeful since Hansen departed.

[Huang Chung]

First Boardroon Radio interview with John Welborn, Prairie Downs' new MD.

http://www.prairiedownsmetals.com.au/Latest/Broadcast-13-February-2009.html

[FarmerGeorge]

Small boost over the past few days nothing to get too excited about but notice that it was beause of Director purchase which is somewhat encouraging. Will have to check out the BRR broadcast.

[Huang Chung]

Welborn's purchases were supposedly on 3rd and 4th of March. Share price has been tickling up a bit for about a week now.

I'm just thrilled to be seeing a bit of life in the ol' Prairie DOG!

[Huang Chung]

Some nice commentary arising from the Dog's quarterly report, released last week.

http://www.miningaustralia.com.au/Article/WA-explorer-hits-high-note/477604.aspx

After their false start with vanadium and copper, I'm not going to get too cock-a-hoop over their uranium and channel iron targets just yet.....

Quarterly report attached below. Contained map of high priority targets is quite interesting.

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=443587

[Huang Chung]

Up 33% today on no news (was up over 50% earlier in the session).

Started to come alive a couple of weeks ago, when surprisingly AMP was a big seller. Just when AMP seemed to have finished their selling, the volume traded dried up, and the share price started to slide.

After a few days rest, the price shot up today on reasonable volume (there are only 73m shares on issue).

Seems like someone is building a position......

[Huang Chung]

Price of zinc has been coming off the bottom.....

http://hfgapps.hubb.com/asxtools/imageChart.axd?s=PDZ&pi=Stock&ct=3&tf=D6&ovs=XJO&si=Index&tima1=20&tima2=20&bi=9&bima=0&comt=index&ds=PDZ&dovs=XJO&val=1&stmp=20090508161951991

[FarmerGeorge]

Hi HC - Just checked my portfolio and thought I'd check to see if you'd noticed! Significant volume spike and ridiculous price move. I think my weighted average price is something like 35cents so I'm not overly excited just yet but it is certainly nice to see some people taking notice. All those metals in the ground must be worth SOMETHING - right?

[Huang Chung]

Hi HC - Just checked my portfolio and thought I'd check to see if you'd noticed! Significant volume spike and ridiculous price move. I think my weighted average price is something like 35cents so I'm not overly excited just yet but it is certainly nice to see some people taking notice. All those metals in the ground must be worth SOMETHING - right?

The last week exemplifies why I'm not trading Prairie Downs. Would have looked smart taking money off the table at 12c, 16c or 20c, at least for a day. Ended up finishing the week at 22c. A month ago, PDZ was trading at just over 6c! A year ago, it was trading close to $1.40.

Now you would think that we'd see a pullback this week, but who really knows?

At the end of the day, this stock is a strong multibagger in my view, so I'm not going to be cutsey trying to time the rises and falls. Just hold and go for the ride, where ever that takes me.

[Huang Chung]

Even though PDZ have $4m in the bank, MD John Welborn is being quite conservative in the way he spends the company's funds in a credit constrained world.

Makes things fairly boring from a newsflow perspective, but at least we will live to fight another day....no dillutive share issues at a couple of cents per share either.

Drilling a channel iron target around August/September should be of some interest to the market. Working up more base metals targets along 17km of strike from the Main, Zed and Gabbro lodes.

Market cap currently around $8m, with $4m in the bank.

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=455279

[Huang Chung]

Company released a market update this morning.

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=456412

Shares up a handy 28.6% today on volumes we haven't seen for a while. Finished close to, but not on, the highs for the day.

Looking forward to the drilling of their CID target in a couple of weeks.

Swapped out of TZN to buy a 'few' more.....

[drillfix]

Hi HC,

Looks like a nice candle there for PDZ along with some good volume.

Hope it can climb back with an upwards march of the price of zinc.

Keep well mate.

[Huang Chung]

Cheers drilly

But I'd gladly swap the 'nice candle' for a Saturn V rocket under the share price my friend ;).

Good chance of a bit of a retrace, but I hope today has blown some of the cobwebs away from PDZ.

[drillfix]

LOL, wouldnt mind one of these Saturn V rockets for some of my small holdings.

Speaking of which, do you follow RDR (reed resources)?

Another story of a mate told me ages ago to grab and has also doubled since.

Just anothe Ahh well, only got so much funds to go around (atm).

[Huang Chung]

Yeah Drilly, I have had a bit of a look at them.

At face value, they look rather interesting, but the shape of the deposit suggests to me that you'd want to be sure that the strip ratio won't be an issue (I'm not saying it is or it isn't, but you'd want to check).

Superficially, the shape reminds me of what Discovery Metals (DML) have with their Boseto copper project....very long deposits, quite shallow, but it seems DML will have to move an awful amount of dirt for every tonne of (relatively low grade) ore they extract. I held them for a while, but this potential issue caused me to sell.

[Huang Chung]

Zinc: A Matter Of Longer Term Supply
29/07/2009 5:15:03 PM
By Greg Peel

"The rationale for this more positive view of the commodity outlook," offered JP Morgan this morning, "is an improved outlook for global industrial production growth".

There is little doubt commodities analysts have been quickly forced into a rethink these last couple of months. Late last year, commodity analysts were all about doom and gloom. Commodity prices had collapsed as a result of the GFC and the prospects for a return to strength looked bleak, other than perhaps a small bounce form oversold levels. Then China started to buy commodities aggressively, causing some sharp price hikes. But analysts were sceptical, believing such a restocking exercise would prove merely fleeting.

That has not been the case. It is now apparent that China means business, and that its planned infrastructure stimulus is a reality which has suddenly reinforced newfound commodity demand. Elsewhere in the developing world, industrial production is also on the rise. For the developed world, it's still a matter of returning from dark depths, but the signs are that the global economy is stabilising, and a return to tentative growth should be in train by year-end.

JP Morgan believes global industrial production will grow by 7% from the second half of this year. To that end, the analysts have upgraded their expected average base metals prices. This results in their 2010 average price for copper and nickel rising by 21%, while aluminium rises 8% and zinc 14%. They have also upgraded their long term price forecast for copper by 6%, and lead by an impressive 25%. But the biggest price increase is reserved for the long term zinc price, which rises 28.6% to US81.6c/lb.

Given last night's spot price for nickel was US75.2c/lb, this is an unusual circumstance. Rarely are long term prices set above spot prices, given higher spot prices draw a response of greater supply coming on line, thus diluting the market and sending prices back towards a lower long term average at which demand and supply are more balanced. While the zinc price has recovered from its oversold level at around US50c/lb late last year, it has fallen from a peak of over US$2/lb in 2006. The implication here is that zinc is now facing a lack of supply ahead.

One reason zinc has an uncertain supply-side future is because over the next 3-5 years, a number of major global zinc mines are scheduled to close due to "ore depletion". This has nothing to with the zinc price, or mining costs, or credit availability, these mature mines are simply going to run out of zinc. And at this stage, it appears only one major new zinc mine is scheduled to come on line.

This means that from this point to some time in the next few years, a zinc supply gap could open up. If that gap cannot be filled, then the zinc price must surely begin a secular rally. There is still a small matter of the number of global mines which have been mothballed on a price/cost basis since the GFC, and the number of existing mines which are planning expansions.

UBS notes that through the GFC down-cycle zinc has shown "surprisingly robust" supply-demand dynamics, evident in only a 1.6 week peak in LME inventories. Past peak levels have reached as high as nine weeks. This figure is not necessarily all that accurate however, given zinc is traditionally stored off-LME as well due to its low price and high storage costs. Low inventories nevertheless bode well for a cyclical price recovery.

The demand side is not, however, hugely encouraging at present. While Chinese production of stainless steel appears to have jumped markedly, thus spurring on the nickel price, Chinese production of galvanised steel has barely hit positive growth, UBS notes. And Western production is down 40-70%.

At present, demand suggests those marginal mines that were shut down in the GFC will stay that way. UBS notes the zinc price will have to return to US80-95c/lb before such mines are brought back out of mothballs. And then if they are, of course, they will again create downward price pressure from the supply side.

UBS believes planned expansions of several large operating mines across the globe will be enough to offset the aforementioned closures of mature mines. Thus if rising global industrial production serves to increase the zinc price, the re-starting of marginal mines will keep a cap on the zinc price.

Canadian mining analyst Desjardins disagrees, suggesting the closure of the mature mines will have a significant impact. Desjardin also believes mine re-starts will serve to close the gap in withering mature supply, but only to the point of demand levels seen in 2007-08 - that is, pre-GFC. If zinc demand returns to incremental growth above 2007-08 levels, then demand will begin to outweigh supply. "Hence there is a very strong possibility that in the next few years," says Desjardins, "prices may return to, and even surpass, the US$2/lb level".

Desjardins has nevertheless set a 2010 forecast price of a less ambitious US85c/lb. UBS has settled on US$80c/lb, while JP Morgan has pencilled in US$77.7c/lb. But as JPM's longer term price average suggests, and UBS and Desjardins debate about, price levels in later years may be more impressive.

[Huang Chung]

Closed at 19c today, up 3c. Good volume as well.

Maybe some positioning going on prior to drilling their channel iron target in the next week or two.

[soulman]

Well done HC. I got in after reading that Aug 13th presentation. Paid top dollar that day but looks good now. I am looking to get some GIR soon.

[Huang Chung]

I'm really impressed with the way 'Big John' Welborn is going about steering the ship Soulman. I think we're in very capable hands.

From what I'm lead to believe, he is one smart cookie, and very well connected.

Iron ore drilling starts any tick of the clock. Good size channel iron target. Fingers crossed :rolleyes:.

Six additional base metals targets along the Prairie Downs fault to test over time.

Always be on the lookout for some corporate action as well, which has been flagged as a possibility on several occasions.

Some risks here....but confident enough to hold a very significant position.

PS Check out the top 20 shareholders on the Prairie Downs website....quite a sizable Kiwi representation.


GIR...patience required, but a complete 'no brainer' in the long run :).

[soulman]

HC, I was lucky to top up at 18.5 cents yesterday. A clear closed above 21 cents today means, from a TA perspective hopefully 25 to 30 cents possible in the near term.

You can actually see significant buying since early Aug.

[Huang Chung]

Hi Soulman

Near term, we should get some drilling results from the channel iron target. Only a small 400m 'dip a toe in the water' program to see if anything's there. Results likely to swing the share price one direction or the other.

With the rise in base metal prices, the fundamentals of the existing zinc/lead/silver resource start to come into their own once more.

[FarmerGeorge]

More drill results expected this month. Believe this is from further up the fault which will give a much greater indication of what PDZ is really sitting on.

Also take a look at their position in Colonial - Just that (5m shares + 5m 15c options @ 34c share price) plus cash in bank (no debt) represents about half of PDZs market cap.

HC I assume you're still hanging in their alongside me but it certainly is frustrating, as far as I can tell they haven't really done anything wrong but this share price remains so weak - is this just due to that high and growing LME zinc stockpile or am I simply missing something here?

[Huang Chung]

Hi FG

Stll plugged into the story, but saw a few more productive opportunities whilst the dogs were sleeping.

Welborn has gone back to basics, mapping the entire fault zone. My mail is that this will be a big year for drilling, to prove up repititions of the main/zinc/gabbro lodes (or not).

I am waiting for more details on the mapping to be released, and also to see if they have some early success with their drilling elsewhere along the fault.

Will it be the year of the dog?

[Huang Chung]

December quarterly indicated that the results of the geochemical sampling along the entire 17km of the Prairie Downs fault will be released in 'February'. If Welborn is true to his word, that would mean sometime this week.

Normally nothing to get very excited about, but a positive report might create a bit of excitement for this beaten down stock. Worthwhile remembering they have already delineated one deposit of nearly 5mt along the fault.

Back in on the basis that this report might wake PDZ from its long, long slumber.

[Ponda]

Anyone still watching and any views??

[shasta]

Anyone still watching and any views??

Hi Ponda

When i was compiling a list of decent resource companies with market caps < $20m & with low EV's (mostly under $10m) PDZ made the list

I get an EV just over $10m for PDZ, not bad for a JORC resource, with tight capital structure & a couple of $m in the bank

HC has mentioned the MD's credentials before, thats what first alerted me to the stock

Disc: Nil

[Huang Chung]

Essentially, the recent drilling returned one very interesting 8m intercept (PDP379), but everything else was fairly ho hum. It will be interesting to see how Ivernia fair next drilling campaign.

Don't forget that PDZ have 5m shares and 5m oppies in Papillon Resources, which has performed very well for them.

[soulman]

Essentially, the recent drilling returned one very interesting 8m intercept (PDP379), but everything else was fairly ho hum. It will be interesting to see how Ivernia fair next drilling campaign.

Don't forget that PDZ have 5m shares and 5m oppies in Papillon Resources, which has performed very well for them.

I was the lucky SOB that sold at 23 the other day. PDZ has been dissappointing but their holdings in PIR has plenty of value not priced in PDZ SP.

[shasta]

Essentially, the recent drilling returned one very interesting 8m intercept (PDP379), but everything else was fairly ho hum. It will be interesting to see how Ivernia fair next drilling campaign.

Don't forget that PDZ have 5m shares and 5m oppies in Papillon Resources, which has performed very well for them.

Thanx HC

I totally overlooked the PIR shares, thats lowers the EV even further

[FarmerGeorge]

Hi all, I've not been on this site for a while but thought I'd check in on the PDZ thread given the announcement. I've held these for a while now, and have been picking up more around the 9-15c mark, selling around 17-20c over the 18 months or so. Currently still hold a fairly large pile of PDZ so I'm optimistically biased here!
Lots to like: cash in bank, no debt, the PIR stock and option holding, the existing resource, the upside possibility of the rest of the fault line (and Iron Ore over by the Dynasty tenement), very low market cap.
On the other hand, while the Ivernia investment will hopefully give us some good results which PDZ doesn't have to pay for, Ivernias project investment option does limit the upside potential. Also, as HC points out, the recent results weren't anything like what they could have been (read: what I was hoping for!). This, along with a large number of disenchanted holders (I see you soulman!) explain the pop and drop after the announcement. And those LME zinc stockpiles look intimidating.
Also they have a weird way of talking about their ability to source deals (ie PIR) as if that might be what the companies core competency is (see filings from 2010) which I find offputting.
Anyway I'm still a big supporter as the market cap is so low and the upside in the tenement looks so immense. Good tonsee you back taking an interest!

[shasta]

PDZ - Drilling Results Confirm Large Mineralised System

http://stocknessmonster.com/news-item?S=PDZ&E=ASX&N=545370

Some nice grade results from the "Wolf" prospect.

PDZ currently up 2.5c to 20c on small volume

EV @ 20c is ~$8m (PIR + PIROA shares = $4.9m at yesterdays closing prices)

[Huang Chung]

Worth remembering that PDZ should recieve $10m in cash or Ivernia shares in just over 6 months, assuming Ivernia elect to go to a 60% interest in the Prairie Downs project (and the way the drilling is going, I would think it's a better than even chance that they will).

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=494213

[Huang Chung]

Worth remembering that PDZ should recieve $10m in cash or Ivernia shares in just over 6 months, assuming Ivernia elect to go to a 60% interest in the Prairie Downs project (and the way the drilling is going, I would think it's a better than even chance that they will).

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=494213

$10m payment to PDZ from Ivernia looks to be on track. Ivernia seem to be making satisfactory headway with the Prairie Downs lead/zinc/silver project.

http://www.stocknessmonster.com/news-item?S=PDZ&E=ASX&N=548624

At the very least, PDZ should re-rate significantly if/when the $10m payment is advised to the market.

[FarmerGeorge]

HC - I think the market is looking to Europe and US at the minute so probably not too focused on our friends at PDZ but this certainly looks very positive - current EV is around the 10m mark off the top of my head so it would be nice if you're right about that re-rate!
Remain a big believer in this tenement - for mine it's just a shame PDZ didn't look to take it a bit further on their own but such is life.

[FarmerGeorge]

Interesting development for PDZ over in Poland(!). IVM dropping out of the Prairie Downs project was definitely a blow but now the SP has about doubled in just a few days on relatively high volume. I know next to nothing about the Polish coal industry so will likely be taking some profit on this latest move and not leaving too much still in there. Anyone else still keeping their eyes on / money in PDZ?

[soulman]

Wow. As high as 28 today. Haven't tracked PDZ for a bit other than seeing them as an investor in PIR (10 mil shares). This Poland deal that set them alight seems a good deal for PDZ. Just 3 mil PDZ shares to get the deal, with extra milestone incentive.

FG, definitely a good exit strategy on an underperforming stock. Then again, most mining stocks are getting the hard knocks these day.

[FarmerGeorge]

Sold a few more in the low 30's today. Not just the coal, as the PIR holding is pushing this along as well I think. Will hold what's left and see if the added attention makes people take a second look at the Prairie project itself.

[soulman]

Got in today at 36.5 FG. I like a momentum looking TA. Look at SIR. A price action like this is so Sandfire SFR 3/4 years ago

[FarmerGeorge]

Yes it's not looking bad - just holding what I have now and watching what the market decides over the next little while. Best of luck soulman.

[FarmerGeorge]

Well done soulman - couldn't have timed that much better!

[soulman]

Well done soulman - couldn't have timed that much better!

Sold out FG. PIR has a great run too. Looks toppy but touched 49 today.

[soulman]

FG, this PDZ phenomenon is indeed real. Glad you kept a few still? I can't timed another entry....too risky. Now sitting at 70.

[FarmerGeorge]

That looks nicely timed soulman, you've done well!
Still have them, just watching now to see if we get any further news on projects. I know next to nothing about charts, and am not much of a trader, so I'll probably miss the best 'exit point'.
When you say 'real' are you referring to anything in particular?

[soulman]

That looks nicely timed soulman, you've done well!
Still have them, just watching now to see if we get any further news on projects. I know next to nothing about charts, and am not much of a trader, so I'll probably miss the best 'exit point'.
When you say 'real' are you referring to anything in particular?

When I see a rally like this, I say it's real. Definitely traders are dictating plays here. The value of PDZ and PIR has risen quite significantly the last few months.

I am amazed by the rally since I last sold out at 48.

The best exit point is not yet been determine IMO. It could well head north to $1. I am not an expert in Polish coal but momentum dictates plays in rally like this.

[FarmerGeorge]

Not sure if anyone still watching - trading halt now regarding the Polish acquisition. Last close 0.765 - should be interesting to see how this plays out from here...

[soulman]

Not sure if anyone still watching - trading halt now regarding the Polish acquisition. Last close 0.765 - should be interesting to see how this plays out from here...

FG, looks like you are the only one in this. I think HC has sold out and I was big fan of PDZ when they were range bound 10 to 20 but gave up when the were yo-yoing. Then obviously the upsurge on the Polish coal acquisition. The update will seem to be positive, seeing the upsurge in PDZ the last few session.

[Huang Chung]

FG, looks like you are the only one in this. I think HC has sold out and I was big fan of PDZ when they were range bound 10 to 20 but gave up when the were yo-yoing. Then obviously the upsurge on the Polish coal acquisition. The update will seem to be positive, seeing the upsurge in PDZ the last few session.

Hi guys.

Sold out a long, long, time ago....well before this Polish escapade.

Now, you might say I'm just being a spoiled sport here, but, for the life of me, I can't see what the market is getting so excited about with the Polish coall foray. Now, I've given this project a cursory glance (at best), but.....1.1m seams of thermal coal at a depth of 700m! C'mon......

Fellas, what am I missing???

[FarmerGeorge]

Hey guys - haven't changed position based on this news. Happy to hang around for the March Resource Estimate and see how things go from there.
HC has probably made his money a dozen times over while I've been hanging around on the Prairie! There is some potential here I think so will be interesting to see how it plays out.

Honestly HC you're probably not missing anything - and while any target tonnage with a 'B' in front of it will always gain some attention market seems to have been underwhelmed with a couple of whacks down for the SP since announcement.

[FarmerGeorge]

It's been a few years but if you'd had some faith at the lows you'd be looking good now. Question is what are the prospects from here? Anyone out there looking at this?

[FarmerGeorge]

The two Polish projects are progressing, but slowly. Most of the action over the past year or two has been on the financing and corporate side. But I would say that news has been good.
Tail starting the wag the dog as European listing appears to be driving trading, and ASX starting to trade at a discount.
Last few weeks gave another opportunity to pick up some on a good dip. The real money was to be made back in the teen's and 20's but I still see significant potential here.
Anyone else?

[FarmerGeorge]

Recent press, broker interest, and coke testing results (v. low ash) from Jan Karski appear to be resulting in a speculative rally / re-rate (take your pick). Up 40% since Feb 8th. I think this is still worth the effort of investigating. Market cap of <$120m still seems light relative to fundamentals. Obvs I'm a holder/buyer.

[Joshuatree]

Jeepers thats been a 10 year plus slow roller coaster for you FG:ohmy:. Is it morphing back to a winner for you?

[FarmerGeorge]

Jeepers thats been a 10 year plus slow roller coaster for you FG:ohmy:. Is it morphing back to a winner for you?

:) Has been a few ups and downs! Always look back and think you should have bought/sold more aggressively at various points. 20/20 hindsight and all that. But even so, net-net it was already a winner for me. Key question is what sort of value they can extract from Jan Karski and Debiensko. That'll determine whether it's a winner from here on. I like the projects, think there's still some way to go. Keen to hear dissenting views.

[FarmerGeorge]

Share price continues to grind upwards, but really we are waiting on BFS from JK or something concrete from JSW re Debiensko. At <$130m market cap still seems light given resource potential. Correct me if I'm wrong, might have just spent too much time on the tractor lately.

[FarmerGeorge]

Market cap now over $150m. There appears to be movement on Debiensko discussions with JSW which could result in a re-rate. Anything concrete would also give some certainty on financing for Jan Karski. Still all very spec but trajectory is positive!

[Joshuatree]

TH price and volume inquiry from ASX. I bought a few when a mate told me about this announcement, last year.Looking int Farmer george.
\Prairie Secures A$18m Litigation Funding (https://hotcopper.com.au/threads/5476638/)