Ann: Cudeco regains 100% control of Multi User Ra, page-25

re: Ann: Cudeco regains 100% control of Multi... Some here are giving the impression that now we have 100% ownership of the rail load out facility we are up for 100% of the costs of the quoted $54 million? for the MURLF. Without the three user's it can now be simplified from a balloon loop to a rail siding which is basically a duplication of 1200 metres of line. The line costs between $3.5 - $6 million for each km (information from Queensland Rail) plus switching gear and a shed on top of that. I've been at Osbourne's mine rail load out many times and it really is basic, actually theirs is more complicated than ours needs to be because they use side tippers and dump into the shed from a raised road. Our concentrate is in sealed containers and loaded onto flat bed rail cars so a loading shed isn't even required. The positive is this then can be leased to other companies when not in use.

I was also reading the Cobalt thread and people voicing their concerns that it isn't viable to extract solely on the principle because Xstrata don't do it at Ernest Henry it isn't viable. Could those that say this please supply the grade of cobalt EHM has? and I think you may find a large portion of cobalt does gets extracted with the copper but ends up in the slag heaps at the Mt Isa smelter. One commodity I haven't worked in is copper so if I don't know the answer to something I ask friends who have knowledge in that field. In this case it was a mate Paul who is a mechanical engineer that's about 60 years young and has worked at Osbourne, Selwyn, Lady Annie and Gunpowder plus numerous gold mines in NSW.

The summary is he thinks Cudeco are smart operators by adding a cobalt extraction circuit. He said Gunpowder wish they did but was too costly to install after the fact as add on's cost many more times than getting it right the first time, bit like deciding to add a extra room to your house its a lot cheaper to do in the initial construction. When companies go cap in hand to the market for capex things that appear marginal at the time get the flick. The cobalt plant at Rockland's may only have a IRR @ 15% but one good year of prices and it can pay for itself two fold. The extra pieces of equipment needed to extract cobalt are an extra bank of floats, filter presses and reagent tanks, pumps piping etc.

The catch is we will be producing a cobalt sulfide which doesn't command the cobalt prices because an extra process is required to extract the cobalt but by installing a roaster fixes this but then creates the problem of sulphur dioxide. Yes the dollar signs for capex are ticking over but hear me out. Sulphuric acid prices are all over the show from not being able to give it away to $100 per tonne, Incitec Pivot will be in a bind when the copper smelter at Isa closes and will have two choices, rail sulphur to the Mt Isa sulphuric plant or sulphuric acid to Phosphate Hill from Townsville, either way they will be up for $50 per tonne freight charges. I wouldn't be surprised if Cudeco aren't already in talks with this company because the cost of railing cobalt sulphide to Mt Isa from the Curry is far cheaper than sulphur from Townsville, then a roaster can be built at the sulphuric plant with the sulphur gases captured leaving a cobalt concentrate for us. Please remember these are the basics in laymans terms and are a little more complicated in real life.