I thought i'd have a quick crack at the recovery impacts.
Current DFS
https://cdn-api.markitdigital.com/a...pdf?access_token=j8IkPnsTcbBVLUTSCmO1Wyl2OHt4
https://cdn-api.markitdigital.com/a...pdf?access_token=j8IkPnsTcbBVLUTSCmO1Wyl2OHt4
mineral resourceis 73mT @ 1.11% and 37.4mT reserves @ 1.22%.
Mine life 15.5 years.
Pre-tax IRR 71%
PRe tax NPV10 US $710M
DFS was based on a 2.4mtpa throughput.
Average Life of Mine Production
-Spodumene 6% grade (t per annum) - 173,000
-Petalite Chemical 4% grade (t per annum) -24,000
-Petalite Technical 4% grade (t per annum) - 98,000
-Tantalum conc 25% (lbs per annum) 174,000
Pricing mechanism
Spod low iron $700 USD
Low iron petalite $483 USD
Ultra low iron petalite $894 USD
Tantalum $75/lb
All things conisdered this equates to an annualised revenue of around $230M USD.
So previous Petalite recoveries were 31%. Now with feed grade of 1.22% to produce petalite product 4% lithia content spod then i need 10.5T at 31% recoveries to produce 1T of 4% lithia conent petalite
Now if 122ktpa petalite are produced then of the 2.5mtpa, 1.29mtpa go towards the SC4 petalite production.
So average lithia recoveries were indicated in DFS as 55%. However, this includes the 31% of the petalite so we will need to work backwards. Noting 1.29mtpa goes towards the 4% petalite then the remaining supports the SC6 product. i.e. 2.4mtpa minus 1.29mtpa = 1.11mtpa.
With feed grade of 1.22% to produce 6% spod at x% recoveries. So we know 173ktpa of SC6 is produced and we know have 1.1mtpa feed capacity. Therefore I am feeding 6.35T to produce 1T 6% SC6.
Therefore, with feed grade of 1.22% my recoveries must be approximately 77%. Seems about right and inline with most other companies in terms of their SC6 recoveries.
Okay so that's me just validating the figures in the DFS and showing how they computed their annualised production and revenues etc etc etc.
Updated DFS with petalite recovery increase
https://www.prospectresources.com.au/sites/default/files/asx-announcements/6987702.pdf
has updated recoveries for the 4% petalite. Interestingly this is now 77% which makes the maths a bit easier. It stated over 60% for all ore bodies. So i'm going to take 70% as the average.
So our SC6 remains linear - no change.
However lets re-run the petalite portion with 70% recoveries instead of 31%.
Now with feed grade of 1.22% to produce petalite product 4% lithia content spod then i need 4.68T at 70% recoveries to produce 1T of 4% lithia conent petalite.
Now we have 1.29mtpa go towards the SC4 petalite production. then i am able to produce 275ktpa of 4% petalite.
Now recall previous produce was 122kpta.
24ktpa was low grade iron
98ktpa was ultra low iron.
Using the same percentage for our new production of 275ktpa that would mean
54ktpa is low iron petalite
221ktpa is ultra low iron petalite
Plugging these production inputs back in with our pricing the same as previous.
New annualised revenue moves to a whopping $358M USD. (Gee Whiz)
I was able to land within 2M USD of the Pre-tax NPV using the DFS figures.
Namely was annualised EBITDA of 114M USD etc. We've now increased EBITDA by around 130M USD assuming no extra operational costs for the extra petalite recoveries. For conservatism i will just assume 100M USD extra ebitda.
The NPV pre-tax at 10% discount rate moves to 1.4bnUSD. Massive. It basically doubles!
That makes sense when it's the primary driver of the economics and you essentially double your output with no extra cost with simple recoveries improvement.
Finally it's worth noting that the NPV is only based on a 15Y mine life which is 37mt of the 78mt that is present. So obviously this goes up even further with minelife extension. The increase recoveries probably mean that lower grade material can be processed beyond Y15.
Also, just out of curiousity there has been some testing figures on the AVZ, FFX and LTR forums suggesting non profitable with current spod price.
I plugged in a $400 USD price for spodumene and it only was a reduction of 50M annualised revenue. Meaning annualised revenue only decreases from 355M USD to 305M USD.
Should be noted that PSC's SC6 will be prices higher than most peers even possible higher than AVZ due to very low Fe content. <.35Fe203 in the SC6.
@Scarpa i've tagged you here a few times and you've obviously been 6 longneck deep each time as you're yet to respond haha. As always need to do your due diligence but i've called you over in a couple of my plays and i think you've done ok in a couple. perhaps you'll pay it forward for me soon
.
As a very astute holder of lithium and frequent commenter on peers i would advise you to cast your eyes over PSC. The product is arguably better than AVZ and 100% will supply technical markets. Additionally the impacts of the low spod price do not impact PSC as much.
Mining licence is approved. Offtakes secured for 100% of petalite production and 71% of spodumene production at the 2.4mtpa rate. the NPV here is better than peers and trades at a fraction.
That's a wrap, i'll text nick tomorrow and tell him to review my work as well as seriously suggest a re-run on the figures if they are eeven remotely close. if scarps see's this post he may challenge my figures. If anyone else see any errors let me know. It is past midnight.
SF2TH
(20min delay)
