The Scoping Study was a combination of mining (UBU) and chemical...

The Scoping Study was a combination of mining (UBU) and chemical processing (DBU) and hence the CAPEX in the SS of US$314M relates to both business units.

SS p21 clearly outlines the work that was put into identifying the most profitable business plan.

"Process Evaluation

The Scoping Study considered seven possible nickel concentrate processing flowsheets consisting of four
different downstream products and three different processing technologies.

The Scoping Study considered the following downstream processing technologies: Pressure Oxidation
(POX), Glyleach and the Albion Process; and considered the following downstream products: Mixed
Hydroxide Precipitate (MHP), Mixed Sulfide Precipitate (MSP), Nickel Sulfate and NCM precursor.

Scoping level engineering flow sheet designs were developed for each of the seven options including
process design information, operating and capital cost estimates. The extensive study work and batch test
work program completed by Simulus Engineers facilitated the selection of the preferred option for ongoing
project development. The Study found that the premium associated with NCM precursor products
significantly improved overall project economics and the preferred option is for Blackstone to produce
NCM precursor as the final product via MHP using the POX processing technology,"

Basically the SS was to work out if we could a) profitably mine nickel @ 12.7 ktpa, and then b) maximise profit through choosing the best end product being 25 ktpa of NCM811, which gave a Pre-Tax Cashflow of ~ US$180M pa.
The numbers came out very good, but since then, the customer i.e. Ecopro, have said that they want more. Therefore BSX needs to go bigger through bringing in Trafigura ore.

After todays announcement we now have a) a profitable mine with a minimum of 12.7 ktpa with an ever increasing MRE/LOM and a CAPEX of ??? and Pre-Tax Cashflow of ~ ???, and b) 85.6 ktpa of NCM811 at a CAPEX of US$491M and Pre-Tax Cashflow of ~ US$376M pa. Remembering that we have 90% of UBU and expect to have 51% of DBU with a proportional CAPEX commitment. Also worth noting the PGE credits are still yet to be factored in.

If we use a ~2/3 UBU 1/3 DBU CAPEX model based of the SS CAPEX of 25 ktpa/$314M NCM811:
UBU CAPEX US$200M for BSX Pre-Tax Cashflow of ~ US$162M pa.
DBU CAPEX US$250M for BSX Pre-Tax Cashflow of ~ US$192M pa.

Total BSX CAPEX of US$450M for BSX Pre-Tax Cashflow of ~ US$354M pa.

SP wise the market looks like it is waiting for the Ecopro JV to be finalised along with offtake confirmation. Once these occur, the SP will finally rerate properly. ST we may see a retrace down to 40.5-42 based off the 62.8% Fib from the latest run. PON and more importantly, NCM811 price should/will dictate SP action during Q3/Q4. MT a MC around $300M is easily justifiable.

GLTAH