As per previous announcement by CLQ - 07/17/20
- The trend indicates that there is upward pressure on the capital cost estimate. Although the final economic outcomes of the PEP are yet to be determined, the Company advises that the PEP capital estimate will likely be higher than the 2018 DFS estimate.
- The trend on operating costs indicates that the Project is expected to remain extremely competitive, still targeting first quartile nickel production costs as a result of strong cobalt by-product credits.
Takeaway would be capital has gone up by a little given will likely. If any more than a two hundred million ( less than 15%) then this is misleading.
With the question of opex, they either are or aren't first quartile. Previously they were. Not now. Capital has gone up hence maintenance has gone up. Infrastructure $$$. Furious activity in action now to review but its gone up by enough to spend extra 3 months stripping back. Will they deliver next month or will there be another delay. Pound for pound this makes sense compared to capex of other laterite plants. Could be capex was optimistic two years ago. Did the Chinese flag this and hence walk away as they did work on this? Not sure we have heard everything on this matter. Been many companies groups working on this. SNC, Hatch, CB&I, McDermott, MCC, Fluor Daniel..... investors should consider why? if you were building a house would you be concerned with some many changes of architect?
What would the reaction be to a significant increase in capital, for example US1billion added to Sunrise project capex to US2.5billion and the opex had increased also? Add in changes to cobalt price forecasts and other financial factors and the drop in npv results in a huge penalty to the Sunrise project and from what I am told justifies a potential write down in the asset value. Most recent example of a mining project write down was Oyu Tolgoi which had a write down in part due to a huge blow out in capex required to complete the underground development.
Once capital is announced can then make a realistic valuation of the CLQ. After investment partners know how much they are required to invest to build the mine, or work out if more appealing opportunity exist. Until then I will watch. If this is how it plays out, questions should be asked at AGM how long has this been known and why has such a material increase not been communicated? Did this first appear on the radar in June? Join the dots. Should be significant change on the board.
DYOR. Don't believe all the ramping on this forum.
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