Prairie Downs Metals (PDZ) - Base Metals Minnow

[Huang Chung]

Updated resource statement is due by the end of the month. Hopefully, this will give PDZ's savaged share price a bit of a kick along.

There again, in this market, it's just as likely to be totally ignored.

How depressing.

[FarmerGeorge]

Don't feel too lonely HC, I've still got all my share plus a bunch of options (erg) I bought at the beginning of this downturn, on an, ahem, 'dip'. Updated resource will hopefully show this to be cheap compared to what they have in the ground but you're quite right there's a good chance it wil be ignored. Sure it's depressing but hopefully it will offer a chance to more accurately quantify PDZ's worth and buy up with confidence. On the other hand it might show we've been fooling ourselves all along and it's time to bail. ha....ha.

[Huang Chung]

Trading Halt.

Hopefully related to the resource upgrade they've promised. Assuming this is what the halt is about, I'll be looking for a doubling of the resource to at least 2 million tonnes grading around 10% zinc equivelent.

I'll be disappointed if its anything less, and very pleased if it comes in higher.

[FarmerGeorge]

Significant upgrade - time for me to start crunching numbers but on first impressions seems very positive.

[foodee]

Ah, a stroke of luck. Got a few before the trading halt. Watching with interest.

[Huang Chung]

Foodee, FG

4.9 m/t blew me away, but the cut is only 1%, so I'm not reading too much into that particular number.

2.5 m/t grading 7.3% zinc, 1.8% lead and 17 g/t silver, using a cut of between 4 and 6 percent is something you can take to the bank, and is probably a touch better than I was expecting.

I would expect that the infill drilling they plan to do will identify further high grade areas within the 4.9 m/t resource, that are additional to the 2.5 m/t high grade areas already defined.....lets throw a guestimate out there and say $1b worth of economically minable metal at current prices. Current market cap around $60m, with capital costs to get into production of around the same.

PDZ also said today that drilling has recommenced and that 'initial indications from this drilling are very encouraging with zinc mineralisation continuing to the west and at depth. They are drilling right through to December, so there should be a continuing flow of news.

They also said that the JORC resource released today was sufficient to justify an initial mining operation of 250,000 tonnes per year.......but a bit further on....'This recent success in increasing the resource base at Prairie Downs dramatically improves the likelihood of defining a sufficiently large resource to justify increasing the operational size of the mine to a proposed annual throughput of one million tonnes'.

PDZ always said they believed that this project could be good for 10 m/t, and it seems like they might have half a chance of being proven right.

I'd say that PDZ might have flown right onto the radar screens of some of the big boys out there.

Bought more PDZ today.

[FarmerGeorge]

There is also a presentation online now which I guess they will be going on the road with shortly. This could set up a nice short term play - I experienced a significant run up with BRW when they were out presenting and sold out a decent chunk at something ridiculous like 90c. And as you say HC there will be a good stream of news for the rest of this year.

Outside of that and longer term I'm looking at the rest of the 20km prospective strike and am beginning see where they are getting their million ton throughput figure from. They have not gone particularly deep in their drilling yet either so all strikes are still open at depth, some even getting broader as they decline. And of course there are potential higher grades available as well. Oh and don't forget the mineralization type is said to be (just a farmer, not a geologist, but I have it on sound advice) relatively cheap and simple to extract and process.
This could turn out to be a real monster find.

However, it is important to bear in mind the significant costs PDZ will have to address given the shortage of pretty much everything from equipment to personel in WA resources right now. We could be hit with a couple more capital raisings as this thing plays out through to production in 2009, assuming they are able to keep on schedule which itself may not be possible. Further the zinc price has been pretty sickly lately and might take a while to recover as this whole debt thing runs it course, not forgetting the potential US demand downturn as they get their schtique together.

On sum very positive from me. HC good on you for diving in a bit further, just wishing I still had some cash around! Have to find something to sell now!

[Huang Chung]

FarmerGeorge - There is also a presentation online now which I guess they will be going on the road with shortly. This could set up a nice short term play

Short term, long term...doesn't matter how you cut it, PDZ is looking fantastic. Today's presentation says 'strong potential for >10 million tonnes'. Crikey, it wasn't that long ago 10 million tonnes was just something at the end of the rainbow.

[cupacino]

Couple of points in the presentation that are of interest I thought, the first saying that they have 20klms of strike identifed but only so far have been over 1.4klms. Also thought the comment that the Gabbro load is getting thicker at depth suggests that this could also be a good Lode. Bigger than Zed? I 'd like to see that!

[Huang Chung]

Hey Cupacino. From Friday's presentation, PDZ say that evidence along strike includes:

• Gossans
• Soil anomalies
• Drill results

Strong potential for >10 million tonnes.

Obviously, the mineralised horizon extends beyond the already defined 1.4km strike length. Lots of targets to drill by the sound of things. The upside here of course is defining more shallow lodes along strike.

The Garbro Lode looks to be a different kind of beast, that plunges downwards, whereas the other lodes seem to run parellel to the surface. The fact that its getting thicker with depth makes this lode a very tantilising proposition. Looking forward to a few deep drill holes to see what might be lurking down there.