Thanks for following up and sharing Christopher. I think your calc is along the right path however I’d make a couple of changes to the numbers based on the info PLS were working on at the time of the bond issue, ie:
- “Low cash operating costs1 over first 15 years: USD 196/t CFR real (SC6.0 concentrate); LOM cash operating costs1 of USD 207/t CFR real” was their estimated cost - The Nordic Bonds are only amortised by 50% over 5 years (balloon in 2022. So the amortisation component would likely be US$30.30/dmt. - The ‘nominal margin’ is of course unknown, but I think the US$50 you’ve used is reasonable (being 24% above cash operating costs).
Therefore, taking the higher LOM costs, I’d say $207 + US$50 + US$36 + US$30 = US$323/dmt. Hopefully never get there!
This being lower than AJM would likely reflect other aspects of the deal being: - PLS had such low projected operating costs - If PLS gets less as downside insurance ... hopefully they get more of the up side when LiCarb prices are high.
Like all things on this pricing model - time will tell as we see published qrtly prices through the cycle/over the years.
(20min delay)