rio new bid for hathor - economics

Hathor deposit about 60mln Lb presently ( say they increase to 80 mln lb) , very high grade and will be extracted open pit. Less recovery 85-90%.

Quick look at economics:


1. New bid $4.7 per share ( Hathor has 139mln fully diluted shares) = $650mln

2. Development cost ( CAPEX) , as per Hathor presenation =
= $460mln

3. Operational cost $14.5 per Lb

4. Production 5mln Lb for 10 years ( mine life)

5. Another point is cost of capital ( CAPEX + Investment) = about $1bln , say at concervative 5% p.a. is $50mln = additional $10 per Lb


Therefore total cash cost of production :
(650mln + 460mln + (14.5* 50mln) ) / 50 mln Lbs = $22.5 per Lb

this is simplistic way ( excluding cost of capital )

So, essantially bidding war for resource which cost to produce about $25 per lb + $10 for cost of capital