$630m upgrade to sitarail, page-7

That is fantastic news @MichaelBond89 , thank you very much for sharing.

I hope people realise the magnitude of the news here. BGS is back to blue sky potential with a serious transport solution that no longer caps production throughput.

With a 5Mtpa rail network, now the company is no longer constrained to a 2Mtpa ore throughput capacity (~400ktpa spodumene concentrate). No more 1Mtpa processing plant, more like 1Mtpa of spodumene concentrate (4 – 5Mtpa plant).  

This enables maximum value to be extracted by front loading production from the potential >300Mt high grade resource:


I agree with your proposed strategy of obtaining BOA’s with financing attached ideally in the form of pre-payments, starting up a DMS plant and selling spodumene as it is quick, simple, highly profitable at current prices and BGS can do it cheaper than many of its peers.

While using these profits to fund the ultimate goal of building a modular lithium hydroxide plant onsite in stages up to 60ktpa and beyond which will more than double the NPV of BGS for an equivalent sized spodumene concentrate only operation i.e. $3B instead of $1.5B.
  

@Jayfire I have emailed Mr. McKay previously about this strategy, using CRE as an example .

If @mineralised's estimate of only ~US$10M per 1Mtpa of DMS capacity in Africa is accurate, then BGS should be proceeding full steam ahead with the maximum plant size that it can obtain BOA’s for, as the project economics would be ridiculously strong - upgrading DMS/floatation/fines recovery circuits from cash flow each year as demand for product increases.


Correct, a hydroxide plant will require, for every 30ktpa of production, approx. 210ktpa in sodium sulphate, sulphuric acid and a fossil fuel source – I assume natural gas will be the most practical. However in BGS' case, it may be more cost effective to use LIT.ax's Sileach process which instead of roasting (energy intensive process requiring fossil fuel), uses a leaching process with calcium fluoride. Management understand these issues and they will be addressed in the PFS by the engineers currently working on it.

This railway upgrade means that these reagents and supplies can feasibly be delivered to site whereas the old line could not in such a large capacity. Furthermore, with some skilled logistical planning, if a 4.5Mtpa DMS plant was built over say 5 years, along with a 60ktpa lithium hydroxide plant, 400ktpa of spodumene concentrate could be sold (2Mtpa) and the returning rail carts (for a minor additional cost) could bring back the required 400ktpa in reagents and supplies to produce the 60ktpa carbonate from the 500ktpa of spodumene concentrate produced by the remaining 2.5Mtpa capacity.

Cost reductions to the OPEX guidance from the SS are likely with these upgrades and smarter capital investment in the logistics route which was terribly inefficient as described in the SS i.e.:
* Onsite warehousing and semi automated loading at the Ferkessedougou dry port
* Onsite warehousing and semi automated loading at the Abidjan Port
* Dedicated designed-for-purpose haul trucks and rail carts
* Train will now be faster and more efficient/more trips
* A fair long term contracted transport rate likely to be negotiated as Bollore will want to pay back their investment
* Currently lowest mining and processing costs in the world for lithium concentrate - hope this is maintained or even improved upon

Hoping for sub $290/t total OPEX. Lower cost = more profit and provides wiggle room if spodumene prices comes off. This would also be offset by producing lithium hydroxide onsite as the market for lithium salts should be stronger than spodumene, as Michael said.

Viability of selling concentrate (unlike African peers) SORTED
Transport SORTED
Power SORTED
Perhaps most importantly, management SORTED

Big de-risking for the company.

Next steps:
Further resource size & grade upgrades
PFS and additional studies/testwork
BOA’s
Mining permit
Financing
Construction

Don't forget the gold

Excited for the value of this fantastic company to be realised with our fresh start due to kick off in the coming weeks with a serious management team at the helm.