Zinc price hits decade high!!, page-23

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Jonboi11

1,274 Posts.

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18/08/17

08:38

Post #: 26580882
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Originally posted by 5hareholder ↑

3% Zn
0.5% Pb
12g/t Ag
Zn Price, say $3,500/t AUD
Pb Price, say $3,000/t AUD
Ag Price, say $20/oz AUD
60% Recovery

Gives a net value of $78/t AUD excl. smelting charges

Now the question is, what is the cost to mine and process 1 tonne? That will be your C1 cost. I'd hazard a guess at AUD $30/t to mine and feed.

Then what is the cost of sustaining capital, labour and overheads?

Sustaining Capital - drilling, infrastructure, maintenance etc. How long's a piece of string?
Labour - Total workforce of 100 in the back of my mind, earning $120k average per annum, $12Mpa.
Overheads - $250k last quarter, $1Mpa. Double that when in operation imo.

So your total costs, assuming 7MTpa of feed is about $35/t plus sustaining capital. Make it $45/t incl sustaining capital (mill shuts, exploration drilling, infrastructure maintenance etc).

So at current prices you'll make a decent margin. $25/t AUD imo, once taking in to account freight, smelter charges and any penalties.

That margin times your throughout - that's your gross operational profit.

The biggest risk is how the mill runs, and how the commodity prices perform. MMG flogged the guts out of it, and there's new zinc plays just about to come in to the market, even just in Century's backyard. RVR, MMG again in Nth Qld at Dugald River etc.

One last thing. Don't forget this little clause from the prospectus. There's $193.7m that has to be repaid, starting at 40% of EBITDA per annum.

View attachment 690390

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On the back of of your thorough analysis here, what do you see as a fair SP for NCZ short and long term?

NCZ Price at posting: 94.0¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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