For those who actually appreciate some detail, analysis and some basis for evaluating what the future may bring, I have run a couple more scenarios for Mt Cattlin - to establish an estimate/indication of likely costs, revenue, etc.
Scenario 1 - Baseline 2020 target scenario, 120kt total, 70kt from new ore, 50kt from stockpiled ore
Scenario 1B - Further drop production if required, in response to potential lower sales, 100kt total PLUS assumes only 80% of this is sold
Scenario 1C - Even further drop production if required, in response to potential lower sales, 80kt total PLUS assumes only 80% of this is sold
Estimates:
Key findings:
Cash costs for SC from
new ore are likely somewhere around
$380-400 per tonne.
Cash costsfor SC from
stockpiled oreare likely somewhere around
$250-270 per tonne.Dropping off to
100kt total SC production, and
only selling 80% of this production,
still sees positive cash flow from this op at prices above about $490/t.Plus, in this scenario, we will have a
stockpile of 20kt of SC, worth $10m @ $500/t, with all costs expensed, except for those due on sale, meaning about
$7.5m of net value to realise later (at $500/t, more if prices later are higher).
Dropping off further to
80kt total SC production, and
only selling 80% of this production,
still sees positive cash flow from this op at prices above about $480/t.Plus, in this scenario, we will have a
stockpile of 16kt of SC, worth $8m @ $500/t, with all costs expensed, except for those due on sale, meaning about
$6m of net value to realise later (at $500/t, more if prices later are higher).
If prices drop to say
even $450/t, in these scenarios where we sell only 80%, we'll need to eat into our cash hoard,
temporarily, to the tune of up to
about $3m, but w
e will still have more value than this in SC to sell later ($6-8m worth of SC at $500/t).
These figures
do not include one-off or "other" Mt Cattlin expenses (e.g. capital items), but you can easily factor an amount in for these and see that we are
by no means taking massive chunks out of our cash hoard in any scenario.
Considering this current environment is dire straits for some other producers, with their own very different individual circumstances of COP and debt etc, it is hardly a concern for us, IMO, with our very large cash buffer to see us through this tough period.
Again, I welcome any corrections, questions etc. Happy to adjust and run other scenarios.
DYOR
