This is a great ann and no wonder the SP went up. All up worth around $155m to KRC. I'm not sure if people have yet realised just how profitable fluorspar actually is. I pulled some recent PFS's from Canada Fluorspar and they were producing it at a cost of low $200 (between $208 - $230).
"The estimated average annual production increased to 131,000 t from 122,000 t, capital costs increased to $154 million from $98 million, and production costs increased to
$231 per metric ton from $208 per ton, when compared to the original PFS completed in May 2011. Economic analysis of the project’s profitability was based on acid-grade fluorspar at $500 per ton, but profit projections also were calculated for prices as low as $400 per ton and as high as $600 per ton." (
https://minerals.usgs.gov/minerals/pubs/commodity/fluorspar/mis-2013q1-fluor.pdf)
I'm also pleased at this statement from the consultant's report:
"Metallurgical test work has indicated that acid-grade fluorite can be produced at the project, and there is potential to improve on existing results through refining the processing path."
So I've been thinking how much is this worth (rough, back of an envelope level). Firstly, some assumptions:
[1] Prices currently stated in China FOB are between $480 and $520 (so maybe
avg of $500USD per ton) (Stated in this Ann on page 4 top para). FOB means Free On Board - meaning supplier pays for transport to the exchange.
[2] Going to use only indicated resources of 13m tons (indicated) at avg grade of 11.2%
[3] Cost to produce from above at a conservative $250 USD per ton (very conservative)
[4] Assume 1.3 stripping ratio since they mentioned they may be able to mine through an open pit approach
[5] Cutoff grade 2% (page 9)
[6] Recovery rate 90.3% (being the lowest of the three tests they have done (Table 6 page 12)
[7] Assuming transport costs to be $70 per ton (based on various PFS data from other companies)
[8] End CaF2 product grade 98%
[9] Tax rate 30%
[10] USD to AUD at 0.80
So...
Contained resource = (Ore / StrippingRatio) = 13,000,000 /1.3 = 10,000,000 tons
Fluorspar = (Contained Resource /CutoffGrade) * AvgGrade * Recovery% * ProductGrade
= (10,000,000 / 1.02) * 0.114 * o.903 * 0.98 = 989,050 tons
Revenue = Fluorspar * $500 USD = $494,525,000 USD
Profit = Revenue - (Fluorspar * (Cost to Produce + Transport)) = 494,525,000 - (989,050 * (250 + 70)) = $178,029,000
Net = Profit - tax = $124,620,300 USD
Net AUD = Net / 0.80 = $155,775,375 AUD
So looks to me that the value of the fluorspar (delivered to market and sold at $500/t) is somewhere around $155m AUD.
Can anyone help validating this thinking?
(20min delay)