It has massive implications. Post #:
49855994 is of mine which quantifies this improvement in terms of the economics. Note i utilised a similar SC6 price to the DFS.
The question is really whether the revised OFS will use the same process circuit which yielded these recoveries. I note that prior to the pilot plant they opted for a process circuit which was DMS only. I recall reading that they were preferencing this type of simplied circuit as it was essentially less complex and easier to get apply on a commercial level.
I scarcely recall them mentioning that they would perhaps add the flotation circuit later. In saying that; they also indicated that Lycopodium was completing the OFS under a concept of modularity. I would have potentially expected that this would include adding a flotation circuit in say Y5. (funding it through profits as opposed to upfront capital). This is just a guess though.
In short, i do think longer term we will have a flotation circuit, i am just not sure if it's going to be included in the OFS as a modular add-on later in the projects life, or as a consideration in the immediate term. Irrespectively, the below go to show how the economics of the project really start to flex when flotation circuit for petalite production is considered.
"mineral resourceis 73mT @ 1.11% and 37.4mT reserves @ 1.22%.Mine life 15.5 years.Pre-tax IRR 71%PRe tax NPV10 US $710MDFS was based on a 2.4mtpa throughput.Average Life of Mine Production-Spodumene 6% grade (t per annum) - 173,000-Petalite Chemical 4% grade (t per annum) -24,000-Petalite Technical 4% grade (t per annum) - 98,000-Tantalum conc 25% (lbs per annum) 174,000Pricing mechanismSpod low iron $700 USDLow iron petalite $483 USDUltra low iron petalite $894 USDTantalum $75/lbAll things considered this equates to an annualised revenue of around $230M USD.So previous Petalite recoveries were 31%. Now with feed grade of 1.22% to produce petalite product 4% lithia content spod then i need 10.5T at 31% recoveries to produce 1T of 4% lithia content petaliteNow if 122ktpa petalite are produced then of the 2.5mtpa, 1.29mtpa go towards the SC4 petalite production.So average lithia recoveries were indicated in DFS as 55%. However, this includes the 31% of the petalite so we will need to work backwards. Noting 1.29mtpa goes towards the 4% petalite then the remaining supports the SC6 product. i.e. 2.4mtpa minus 1.29mtpa = 1.11mtpa.With feed grade of 1.22% to produce 6% spod at x% recoveries. So we know 173ktpa of SC6 is produced and we know have 1.1mtpa feed capacity. Therefore I am feeding 6.35T to produce 1T 6% SC6.Therefore, with feed grade of 1.22% my recoveries must be approximately 77%. Seems about right and inline with most other companies in terms of their SC6 recoveries.Okay so that's me just validating the figures in the DFS and showing how they computed their annualised production and revenues etc etc etc.Updated DFS with petalite recovery increasehttps://www.prospectresources.com.au/sites/default/files/asx-announcements/6987702.pdfhas updated recoveries for the 4% petalite. Interestingly this is now 77% which makes the maths a bit easier. It stated over 60% for all ore bodies. So i'm going to take 70% as the average.So our SC6 remains linear - no change.However lets re-run the petalite portion with 70% recoveries instead of 31%.Now with feed grade of 1.22% to produce petalite product 4% lithia content spod then I need 4.68T at 70% recoveries to produce 1T of 4% lithia content petalite.Now we have 1.29mtpa go towards the SC4 petalite production. then i am able to produce 275ktpa of 4% petalite.Now recall previous produce was 122kpta.24ktpa was low grade iron98ktpa was ultra low iron.Using the same percentage for our new production of 275ktpa that would mean54ktpa is low iron petalite221ktpa is ultra low iron petalitePlugging these production inputs back in with our pricing the same as previous.New annualised revenue moves to a whopping $358M USD. (Gee Whiz)I was able to land within 2M USD of the Pre-tax NPV using the DFS figures.Namely was annualised EBITDA of 114M USD etc. We've now increased EBITDA by around 130M USD assuming no extra operational costs for the extra petalite recoveries. For conservatism i will just assume 100M USD extra ebitda.The NPV pre-tax at 10% discount rate moves to 1.4bnUSD. Massive. It basically doubles!That makes sense when it's the primary driver of the economics and you essentially double your output with no extra cost with simple recoveries improvement.Finally it's worth noting that the NPV is only based on a 15Y mine life which is 37mt of the 78mt that is present. So obviously this goes up even further with minelife extension. The increase recoveries probably mean that lower grade material can be processed beyond Y15.Also, just out of curiosity there has been some testing figures on the AVZ, FFX and LTR forums suggesting non profitable with current spod price.I plugged in a $400 USD price for spodumene and it only was a reduction of 50M annualised revenue. Meaning annualised revenue only decreases from 355M USD to 305M USD.Should be noted that PSC's SC6 will be prices higher than most peers even possible higher than AVZ due to very low Fe content. <.35Fe203 in the SC6.Mining licence is approved. Offtakes secured for 100% of petalite production and 71% of spodumene production at the 2.4mtpa rate. the NPV here is better than peers and trades at a fraction.That's a wrap, i'll text nick tomorrow and tell him to review my work as well as seriously suggest a re-run on the figures if they are eeven remotely close. if scarps see's this post he may challenge my figures. If anyone else see any errors let me know. It is past midnight."If you were to re-run the above and input the elevated pricing mechanisms you get some eye watering figures. For now i'm not banking on the increased recoveries being part of the OFS. But I am banking on this being a very tangible and likely scenario of what PSC would implement 3-5years into the operation of the project. Which obviously goes to show serious upside in whatever the OFS does deliver.
SF2TH
(20min delay)