COB (ASX) Help With Valuation Exercise on COB

Originally posted by Duncan04 ↑

@ persistentone: for CAPEX you may want to look a this thread of a few days ago
https://hotcopper.com.au/threads/ann-significant-thackaringa-drilling-program-complete.3976474/#.WmyXJiOPBE4
I have taken the figures from holders who seem to have specific knowledge but they are all estimates of course:
From Precipitate: 132KV 22 km line Below $ 20M +transmission substation at mine under $20M: Max $ 60 Million in worst case. (FYI COB mentions 66Kv line.)
From Rogue: $ 2M/ km for 4 lane highway without bridges: As 22km from Borken Hill to site = 44Million + i assume 30% in case of bridges etc = $ 60 Million max.
From Eureka: $ 30 Million for 22km water pipeline
Processing plant:by far the most difficult to calculate: each mine is unique especially in the case of COB:but from Eureka : estimation of $250 Million. Personally, taking into consideration the fact that there is no need for expensive HPAL + the fact that only 20% of the mined ore would need to be treated (since COB would use a cheap and simple gravitation process to get a concentrate first ( COB mentioned laterite projects can't do that) ) i expect the processing plant cost to be significantly lower than its competitors in Australia, but only time ( PFS then DFS) will tell for sure.
Engineering: from Eureka: 8% of above Capex = 8% of 400 M = $ 32M
Total: AU$ 432Million. = US$ 345 Million

COB’s goal is to produce 4000T/Y equivalent metal = 8 Million pounds (if they are using US Ton). Their aim (check their announcement) is to be at OPEX US$10 to 12/lb and right now world prices are north of $34/lb. So turnover would be around US$ 270M/ y and operating profit at USD 176 Million/y if we take $12/lb.

Now for comparison:
-CLQ (Mine in Australia):as they were getting listed on TSX last month they announced: Capital cost US$ 780 Million BUT for output Cobalt metal equiv. 5000t/ y and 18 700 T/y of Nickel ( last figure based on PFS as no update on Nickel in Nov 1^st 2017 release),. Further their mine is laterite and as such they need to use the expensive HPAL, not the case for COB.
-Ecobalt (Mine in Idaho US): total LOM capital and reclamation cost is estimated at $288.1M, including $186.7M for initial capital, $5.8M for long term water treatment bond collateral, and $95.6M in sustaining capital and mine development capital during production over the LOM, reclamation and closure cost. I assume figures are in Canadian dollar. As per their website they aim was to produce 1500 ton of Cobalt Sulphate/ y but V recently they seem to reconsider and instead produce a more upstream product, Cobalt concentrate instead. On 27 Sept http://www.ecobalt.com/news/news-re...feasibility-study-on-the-idaho-cobalt-project the revised planned Output would be 2200 T of Cobalt along with 1650T of Copper and 3000 Oz of Gold/ y. ( Conversions made based on US Ton).

Expand

I appreciate the ideas around capex.

Does cobalt usually sell on forward contracts, as a negotiated commodity like lithium would? Lithium spot price is north of $20K USD/ton, whereas the actual selling price is based on forward contracts is around $13K USD/ton. $35/ton (or whatever today's cobalt price is) is a spot price.

I did not realize they were using US tons in their estimates. I (incorrectly) assumed that all of these miners had standardized on metric tonne.

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(20min delay)
Last 8.0¢		Change 0.002(2.56%)		Mkt cap ! $33.73M

Open	High	Low	Value	Volume
8.0¢	8.0¢	7.9¢	$4.093K	51.64K

Help With Valuation Exercise on COB, page-45

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