So let me get this right as you are now coming across as completely and utterly clueless on how mines are built when expansion options are foreshadowed as per a DFS.
So in your words, we have a DFS that says that the company will expand to 4 mtpa 4 years after production starts, so in your words you will scope the whole plant at 3mtpa with no ability for incremental capex to be put on it down the track?. So when you have to get to 4mtpa, rather than have incremental investment to ensure the 4mtpa comes to fruition, in your words, what you will do, and is inferred by your questions, is close the plant down, meaning no production for a while, rip out a lot of the existing capex tlike the SAG for example, and build a whole new plant capable of 4mtpa with all the new debt that involves.
Either you stupid or pretend to play stupid. When you build capex you scope the capex to future plans where you have to - because downtime and continuing production when you expand still a key to minimise debt. Bankers are not stupid either.
This is exactly what your beloved SYR has done - they put capex in for what they need now and what they need down the track that cannot be deferred, and then use incremental capex to ensure the expansion is capable of been done.
So a simple yes or no answer - Do you think LTR should build a 3mtpa plant at exactly that 3mtpa capacity and then rip it up to get to 4mtpa or have severe production shutdowns to get to 4mtpa. Let us know your answer as a yes or no only.
I was clear in my own mind what they will do when they did the DFS, as would bankers. I am not sure what it is you don't understand about project development.
All IMO
To repeat now an earlier post in full:
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We have been here before and I feel what you have posted might show your lack of understanding of process flowsheet design and how projects are built within the concept of limiting shutdowns when expanding. We had this debate around this post and several posts before that -
Post #:
- on this funding non-issue. In simplistic terms I will start with this simplistic example:
Example 1: Gas Pipeline capacity
When you build an onshore gas pipeline, the biggest costs relate to the pipeline itself, the compressors and its installation, and in particular the underground pit the pipe goes into and then gets covered. A very simplistic example.
i.) Pipeline has demand of x in Year 1 but proponent believes the pipeline will have demand growth of 50% in year 5 ('y' capacity). The pipeline diameter to accommodate 'x' is less than it would be for 'y'
ii.) To accommodate that 50% demand growth they will need an additional 3 compressors.
What will they initially install as original capex? Well they will build a pipeline with 'y' capacity (a bigger diameter) because not doing so is going to be a big problem down the track. You can't upscope the pipeline from x to y without significant cost or significant shutdown time, or what is referred to gas pipeline looping if using the same pit, or alternatively you have to build a separate pipleline at even greater cost to ensure overall pipleine capacity = y.
The 3 additional compressors on the other hand you can install as demand increases - it is how pipeline construction works.
Example 2: rail capacity
Another simplistic example.
When you build a railway it is built at a capacity to accommodate current train and future demand, but the initial design allows for the future demand - which is a function of your ballast, concrete sleepers, formation works, and rail gauge itself, and the communication systems that operate it. The incremental cost that leads to limited downtime in the expansion is building rail passing loops and improving communication systems (these are about 500 metres to 2 km in length and referred to as sidings) which allow more trains on the system and these passing loops are quite low incremental costs but can increase capacity of a rail network by quite a lot.
What is LTR saying
If one can follow the two very simplistic examples above it becomes a little clearer. I tried to use very simple examples and I hope they don't offend.
What LTR is saying is that certain parts of the process flowsheet - i.e. the capex - have to be built at 4mtpa in the now because if you don't you are going to have serious problems in scaling up that part of the plant without significant and major shutdowns of the current operation. It is as simple as that.
Project economics dictates that for parts of the plant they must be built at 4mtpa in the now - there will be other more specific capex that can be built when the 4mtpa facility is actually warranted because their adding to the plant doesn't impact the operation of the existing 3mtpa production (or what one refers to as incremental investment).
In other words it is about downtime, lost production and recovery rates as to why you would scale some parts of the plant to 4mtpa in the now. It is not voodoo economics.
At times I think engineering and process design concepts should be intuitive, but I guess maybe I am making some wrong assumptions and should have a VB to contemplate this point further.
All IMO
(20min delay)