Hi Sparecash, Thank you for highlighting the significant overburden WKT needs to remove as shown in Figure 9.
Based on the information from the IIR report, The project is virtually unviable in the first 3 years when mining costs need to be delayed, as detailed in the IIR report they only expect Gemcorp to see a free cash sweep of US$6-8mil, which is based on the 30% share of the forecast free cash (US$20-27mil total free cash in 2.5 years of mining). It also details around 4.3 million tonnes of waste is not being deferred during this period, as Farmer has suggested these works along would cost around US$20mil (i.e where Gemcorp would see its US$6-8mil free cash bonus)
In year 4 onwards you can see a significant increase in mining waste and low grade (Yellow and Grey), Year 1 has around 1mil tonnes of waste and low-grade ore that needs to be moved, and in year 5 WKT needs to move 1.8.mil tonnes of waste and low-grade mineralisation.
The US$10-13.5mil forecast free cash margin over the first 2.5 years of mining is most likely taking into consideration the mine is operating at 100% of the DFS forecast for recovery, flake size retention, purity, and the higher basket price of US$1300 as detailed in the IIR report, it's not going to take much to wipe out this small forecast profit with the variability of the orebody or if WKT suffers similar losses as other graphite mines have shown is possible or the US$1300 forecast basket price is not achieved.
If WKT survives the first 16 years of mining, this would be the best time to buy into the company, the waste has been removed and WKT will be predominantly mining graphite ore. The Free cash margins in these years will be significant. 16 years is a very long time to wait, many of you guys would have dropped off the perch by this time and will never see the possible financial benefits.
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