1. Grade of product is 5.8% - suspect this will increase after MET tests. 80% recovery is very good, and I expect this grade to increase. 2. Opex costs US$323 largely the result of the waste to ore ratio going down to 0.55 to 1 (very very very very very good compared to other hard rock plays where this ratio is north of 3:1 for all plays, with possibly the exception of Greenbushes which is still higher than AVZ). 3. No tin credits in point 2 above - suspect in DFS this will provide a credit of US$50 per tonne, so opex costs more around US$270 per tonne. 4. Transport costs unchaged from Sept 2018 Scoping Study, albeit the route has firmed and changed. At US$223 per tonne transport cost the key is they are modelling around the existing route (and known upgrades scheduled in with 100% certainty at this point of time). Again over time as the route is upgraded, especially the rail component, expect this cost to come down. 5. My only disappointment is the MET tests would have been invaluable to this SS, hence my annoyance with the delay. With the MET tests my view is the study would have been based on 6% - 6.3% spodumene concentrate product with tin/tantulum credits reported as an offset to opex. 6. Notwithstanding 5 above, it is obvious the project economics stack up, it is now a case of whether the market can accommodate AVZ to 2025 (and AVZ securing finance and Offtake Agreements been the unkowns). 7. In summary more upside than downside, but a SS that could have been even better if 5 above could have been addressed by the MET tests (so need to wait to the DFS to get total picture).
All IMO
AVZ Price at posting:
5.2¢ Sentiment: None Disclosure: Held
