Which part of the location, transport and logistics solutions don't you like specifically? I am interested to know so I can investigate and research in an attempt to further my understanding and highlight the risks.
Transport and logistics will present a set of challenges, but they shouldn't be insurmountable. Bekisopa is ~350kms by road to the port in Toliara, in which a one way journey with loading and unloading expected to take about 10 hours (if I recall correctly).
There are a lot of IO mines that are a lot farther from the port than 350kms, so I don't think the distance is catastrophic.
The small size of the trucks (not longer "road trains") will be an issue initially, but I think this is something that has the potential to evolve as the company gets more familiar with the journey and can build infrastructure to support larger vehicles.
I do not think running frequency of the trucks will be a major issue, especially when convoys / trains of vehicles are used which should minimise disruption to towns, and risks to people.
FMG didn't have the option to use road haulage in the early days and needed to raise A$2.5B in funds and dilution to build a rail solution in order to have the scale to make the operation viable - https://en.wikipedia.org/wiki/Fortescue_railway
Bekisopa is at about 1100m above sea level, so the majority of the journey is down hill with full vehicles, and uphill with empty vehicles. This should be fairly good for fuel consumption. We could speculate about potential benefits of electric trucks, but let's not for now.
As the volumes increase, there will be the requirement to build bypasses around towns etc, but these have been factored in to the higher capex option. I know some companies in Australia build private roads - not sure if that would be viable for the whole journey, but maybe for segments of the journey.
The initial plan is for 2mtpa, and Paul (the MD) has mentioned the roads, with proper investment, could potentially be used to transport up to 3 or 4 million tonnes per year. I did do some numbers on how many trucks per hour that works out to be, but that was some time ago and I did speculate that trailers could be used, this has been ruled out initially.
WAI and Simon Francis from Orior Capital did similar calculations, but I'm assuming there will be further studied to determine what can safely be transported - which will be influenced by the state of the roads.
As the crow flies, Bekisopa is about 250kms from the coast, and there are opportunities for much larger volume solutions, like slurry pipelines or potentially rail. There can be very good commercials depending on distance, quantities and topology, but it will require scale and a pretty significant investment. Hopefully land acquisition costs will be reasonable in Madagascar by the time we go down that route.
There was a call where Paul said that (I believe it was) Jason Whittle (our GM - https://www.akoravy.com/leadership/jason-whittle) had experience in build and working with slurry pipelines in a previous role.
I'd rather be building this stuff incrementally in Madagascar off the back of solid revenues from an initial 500ktpa production, than having to build a 1+ mtpa plant and rail or slurry pipeline to get the project going (like HIO and others).
Share your concerns, and let's discuss
AKO Price at posting:
16.0¢ Sentiment: None Disclosure: Held
(20min delay)