Just reviewed the detailed technical report for McWaters. As a stand alone deposit I see it as a very nice little project. I don't understand why this wasn't persued first by Liberty. The situation could have been very different.

What I don't understand is, while the economics look good for the deposit as a whole I don't see its overall value helping Liberty get through all its obligations with the Chinese.

Yes there should be no taxes payable on those profits due to all the losses that have occurred over the last few years. And while nickel prices have risen to $8+ for now, so has the Canadian dollar exchange rate. We need the nickel price to rise with a falling exchange rate instead. So the two seem to eliminate each other.

While many forecasters seem to think that nickel prices will rise over the next two years, with McWaters having a 2 year life (LOM), this deposit could be depleted by then and not take advantage of those higher potential prices.

And since the Chinese obligations are all due before McWaters is depleted I don't see where Liberty will raise the required cash to get Hart going without borrowing more money again.

While the economics are positive for McWaters i do question the use of a VERY generous discount rate of 8%. Mining ventures are not really a blue chip venture so I would think 10, or 12% (maybe even 15%) would be more realistic. The company is paying 8 & 10% interest rates to earn 8% on a venture. That makes little sense.

I think these economic numbers should be implemented in an overall cashflow sheet of expectations for the entire company. Sure other revenue may come in from Redstone, but these extras require upfront capital each time.

So while McWaters looks good as a stand alone venture there better not be any unexpected hiccups to throw those numbers out of whack. Its a pretty fine line to follow.