Hi guys just bringing us back to basics and reminding everyone that Walkabout Resource is worth a look another look and then another....It's not your average stock and on the cusp of being fully funded...from bond note
Strip Ratio still is miss understood within the graphite industry have added some more detail to an earlier post ...Key benefit of high grade allows the project to operate at a different level....High strip ratio,high cut off, lower capex
As mines struggle to secure funding ,funding from a debt partner over issuing large amounts equity is preferred....IMO To issue more equity is dilution of value for life of mine where a debt funded project also comes at a cost this cost is only over a short period...
Grade is King in flotation technology....
If TGC grade is 5% TGC with a 100% recovery rate only expect 5 tons from 100 ton of through put...
If TGC grade is 20% TGC with a 100% recovery rate yield of 20 ton's from 100 tons through put ...
Providing you have improved TGC grade a higher strip ratio can be achieved while
the cut off grade must also go up to benefit....It's very important to grasp this if you are to understand
the efficiency of the project....and compare to others
Project A example first 1000 ton's
Runs 100 tons at a grade of 5% TGC while the cut off maybe 2% TGC....Most of the material moved at mine level is therefor fed thru the plant..Strip ratio 2:1 life of mine contained average 3.3% TGC. Lets give it a cost of $15 per ton of material mined at mining level
Meaning 2 plus 1 tons of material moved for 1 ton of concentrate return
1000 Tons @ 3.3% TGC and 90 % recovery =
29.7 tons of concentrate
Mining level cost $45 (3 x 15)
for 29.7 tons
Project B example first 1000 ton's
Runs 100 tons at a grade of 20% TGC while the cut off maybe 10% TGC....More material is moved at mine level how ever less material is fed thru the plant with reserves preferred.A Strip ratio 5:1 life of mine contained average 17.9 % TGC over life of mine.Lets give it a cost of $25 per ton of material mined at mining level
Meaning
5 plus 1 tons of material moved for 1 ton of concentrate return
100 Tons @ 17.9% TGC and 90 % recovery =
161 tons of concentrate
Mining level cost $150 (6 x 25)
for 161 tons
Project B
To confuse the issue if you had a strip ratio of 4:1 from with same 10% cut off and life of mine grade @ 17.9% TGC Project B would be slightly better but no material benefit
$150 vs $125
The key benefit is reduced capex for same thru put...mly a high grade resource can achieve this which is what Walkabout Resource have...This does not discuss distribution and basket price which can be discussed later...Rest assure the distribution of Lindi material is world class...
Post from the other day....
Quality is a consideration in strip ratio.If a deposit contains low grade quality ore more of it must be mined in order to achieve a return on investment. A higher grade deposit can support a higher strip ratio. There is an inverse relationship between deposit grade and strip ratio. The higher the grade inversely reduces plant capex and ROM of mine.
The higher the grade inversely reduces plant capex and ROM of mine.
Firstly the project needs to be separated into 2 operation's.You have mine level and mill level...At Mill level this is all startup capex which needs to be accounted for as upfront cost. If this to high your eventual debt/equity ratio could end up looking like this 5%/95 leaving little of the project...reduced earnings per share
Strip ratio is an interesting one as this can confuse many investor....
IMO it already has
Lets take a look at WKT who have a high strip ratio one may conclude this not good where the opposite is true...Lets explain in a little more detail
Tanzania mining cost per ton vary from $13-25/ROM ton not significant or cost sensitive for Walkabout Resources..
In year 1
strip ratio 5:1 meaning 6 tons of material moved for 1 Ton of concentrate with worst case 25 x 6 = $150 at mining operation level...What you are looking for is free cash margin where the cut off grade @ 10 TGC all material below 10% is considered as waste not reserves...Lindi free cash margin will be around US $1200
We could lower the strip ratio and run more material while the cut off goes down and the thru puts only go up increasing start up capex...This is not what you want to do IMO for an efficient operation
What a lower grade project may do is give a lower strip ratio while the cut off grades are reduced and in some cases this can be as low as 2% TGC...What is happening is more product is being fed thru plant to achieve less tons but saves little at mining level cost dependent on each project...as Lindi is from surface with little pre-strip
Project B 2:1 = 3 tons of material moved for 1 ton of concentrate. Using WKT mining level @$25 = $75 at mining level where the thru puts are significant increasing Start up as much as 5 times capex...to deliver same tonnage
One really needs to pay attention to the inverse relationship of grade to efficiency of project lowering capital intensity per ton mined...
This is just the first part of understanding why a higher strip ratio combined with a higher cut off is of importance....Higher grade equals efficiency but only a quality resource can achieve this...
Best in class
The distribution is also a major consideration where each ton mined produces a different mix with the higher proportion of flake size the more valuable...as product is limited in nature and projects underpinned by vanilla markets can not select mine...can not get funded in current markets due to no free cash margins...IMO
Walkabout Resource have further de-risked the project by being able to
select mill feed. No other project can do this in peer group...This gives us great control of mill feed as the high grade domains can be stock piled and blended with lower grade material when applicable. It also gives the project opportunity to high grade feed the plant if required achieving grades of 22% TGC in first years...
Pareto have done the due diligence and will be funded shortly IMO being oversubscribed all IMO and very important everyone does there own research...
Croc
(20min delay)