"While waiting for the next chapter of the AVB story to hit the stands can any of the more mining experienced posters give a ballpark guide to capex for a 50ktpa mine (eg only ) and a stab at cash cost pp or pt (benefits of gold/silver?)? Thanks in advance"
This has been on my mind for a while and your post prompted a closer look. The reason is simply the relativities between this silly 3% of in-ground copper value and production/profitablility. See chart page 4 :
http://www.minecost.com/Brochure.pdf
The 2009 costs vary from say 70c per lb (ignore the one at 55c) to $1.90 per lb.
Add what you like to shift this average up a bit to 2012. maybe +12%?
The "costs" are quoted as mining, milling, TC&RC(treat and refine concentrate?) and Ship, royalties, Carbon Tax. The average looks like $1.20 per lb (2009) or $1.40 (2012) Over a RANGE of mines. Open pit and underground. Clearly there must be a sizeable range in profitability too, which is what counts the most...
Figures are available for Antas South but it was a bit hard to understand in terms of Total Cost and Freight to confidently translate into the above chart.
(As Kalenn suggested, from BellPotter report use 2% or $33 per oz for gold in-ground value, as a value of precious metal credit. Around $20m implied value for AVB today)
To go and buy a deposit you pay (or buy a company) say 3% in-ground value or 10c per lb.!!!
Now production costs are around $1.40 per lb avaerage... so what this clearly says is you buy the Richest (best %Cu), cheapest to mine deposit.
You can justify paying over the norm for such a good deposit. Even at 20c per lb, the extra 10c can be more than offset by massive reductions in Total Operating Costs.
So AVB looks Very attractive compared to low grade high tonnage deposits.
Capex : The Argonauts suggest a capital expenditure of $250m for a 3.0Mtpa mine (including costs associated with further drilling and feasibility studies) They also quote a Cash cost of $1.10 per lb. (net of gold credit) but one has to beware of what this cost actually includes. Like the word Fair, Cost is one of the most flexible terms in the English language. Different things to different people.
Is it a cost to produce copper in a rough concentrate, or a full SXEW plant shipping copper cathode? Does it include freight as FOB etc etc....
So the main thing to come out of the above : An easily mined and high grade deposit should attract a valuation premium because it permits large reductions in operating costs. This becomes more evident as the world is forced to work lower grade deposits....
Which in turn means..... Would you rather hold AVB at 11c or boring BHP.??? :)
AVB Price at posting:
11.0¢ Sentiment: LT Buy Disclosure: Held
