I refer to OUTSIDECapital's Straw today referring to POS Maiden Resource Estimate (MRE) for Golden Swan', and discussion regarding potential to restart operations. Interestingly the market reaction to the MRE today was ho-hum, with the price declining marginally, down 0.5 cents (-4.7%) to 10.0 cents by the end of trade, on reasonably high volume of 12.3 million shares (ASX only). Obviously the market's expectation for the estimate was for it to be higher.

There is a general comment made by many commentators that "the market is always right". Actually I disagree, and its our task as investors to consider where the market has got it wrong. In my opinion POS is very much unfairly judged by the market. OUTSIDECapital's Straw also referred to the restart of operations being low cost (capex), and the short lead time for that restart. I fully support his comments, and I personally am bamboozled as to the continuing failure of the market to recognise the opportunity with POS.

The Ni price is close to an all-time high. And yet the outlook for the metal price is even more positive, with likely increasing demand due to the forecast useage particularly in battery applications which are only going to rise.

Now back to the Golden Swan Resource estimate announced today, 160,000 tonnes at 3.9%. Firstly its a resource, and of course doesn't include mine dilution factors etc, nor recovery factors. But just look at that resource, and compare that to a similar gold resource estimate, based on current spot prices, and for that matter a copper resource:

Ni 1%, is equivalent to 3.5g/t Au, and 2.04% Cu. Thus the Golden Swan estimate of 3.9% is equivalent to 13.6 g/t Au! or 7.95% Cu! In other words it is a very high grade deposit. And it sits adjacent to the Black Swan MRE, of 219,600 tonnes at 7% Ni - that is equivalent to a gold resource grading 24.3 g/t (ie slightly more than 3/4 of an oz per tonne!). That would be amongst the highest grade gold deposits ever mined in modern times in Australia!

The potential for additional Ni resources within POS ground remains very high, and the drilling is continuing.

Once in production POS should be very strongly cash flow positive, subject the Ni price at that time - and as I've mentioned above there is every likelihood that the Ni price will be higher at the commencement of restarted operations.