Sunrise Sensitivity to Cobalt Price

This is an interesting, and important chart from the Macquarie Australia Conference, May 2018.



A spot cobalt price of US$40.26, at the time of this particular marketing exercise, resulted in a C1 cash cost (post-credits) of negative US$3.38/lb Ni. Let's assume Cleantec was to give the same presentation today. Spot cobalt price is now about US$25 per lb, A DECREASE OF ABOUT 38%. For this cobalt price, cash costs increase by about $2.85/lb Ni to negative US$0.53/lb Ni. Average annual nickel production for Years 2-25 is about 18,500 t or 41M lb (see DFS). Therefore, annual revenue decreases by 41M x US$2.85/lb Ni = US$115M or US$2.8B over the 24 year life of mine. That's a big chunk of change wiped off from the project bottom line. Of course this revenue reduction is far greater since the spot nickel price has also decreased substantially (greater than 25%) since this marketing event.

Note that the comparison is for spot prices at the time of the Macquarie conference and today. It is not a comparison of DFS prices and spot prices today. The point is, it is going to be very difficult to market this project and obtain finance because the project is so sensitive to the cobalt price. Sam alluded to this in an article that was posted earlier today. I think there is a very real possibility that this project could be delayed beyond the current deadline of May/June 2019 due to inability to secure the requisite finance.

Food for thought.

My opinion only, no intent to mislead, not financial advice.