I Go Long..."If he's correct about not doing a JV, why bother with this other $2M drilling program? They have the NI and they know what's in the ground. Why not just get started? I would think they are going through this whole other process in order to prove there is more more worth under the ground so they can negotiate a better JV."
In the mining business, there are basically three phases to a company's maturation:
1) Exploration phase - finding/locating a deposit
2) Development phase - after a deposit has been discovered, extensive drilling program to "prove up" resources and reserves.
3) Mining phase - actual extraction and sale of the deposit.
Some companies focus only on exploration, while others are successful in locating a deposit and proving up the resource. The majority of junior minors are in this category and never plan to get to the mining phase. In order to mine a deposit of the magnitude of this elephant property, large capital/personnel resources are needed. It is a rare junior minor that ever gets as far as the mining stage. The big money for them is in either locating a big deposit / proving it up.
After the deposit has been located and a drilling program completed, the junior minor can either partner up with a larger mining concern that has the resources and expertise to bring the property to the mining phase or sell the property outright.
The junior minor will normally attempt to do as much drilling as possible as the more reserves that are on the balance sheet (this would be proven and probable reserves as measured and indicated are resources that cannot be held as an asset), the greater the sale price of the property will be.
In my very limited opinion, SRSR is in this development stage and is attempting to do as much drilling on its own as possible. This will ensure that the stockholders will get top dollar for their holdings should a property sale occur. If a JV/Off Take is chosen, the company will have a stronger bargaining position as the partner needs to "buy in" at a greater value.
As far as I can see, SRSR is doing one heck of a great job in taking this property solo for as long as they can. The more that we prove up on our own, the greater the value that will / must be reflected in the stock price. I am anticipating a measured and indicated calculation for the D Zone and maybe even a "probable" calculation as the first step in a reserve calculation from this summer drill program.
Nothing from the company yet so these are just guesses, but I wouldn't want to be out of this stock when the the phase II drilling results are announced. I am welcoming this accumulation period for the stock and am adding every week to my already over the limit holdings of SRSR. Good luck all as it is all good!....Having a great summer....Jim
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