Ann: Drilling Expands Cu-Au Footprint at Kanmantoo Underground, page-31

I've ben looking with interest at the MLX Copper division saga.

They realised in November that they were flogging a dead horse. (N.B. On going monthly costs of $0.72m. Maybe one protests too much about Lachlan's care and maintenance costs.)




It would seem that their plant is a similar size to ours. In the Sept 19 quarter they operated the plant for 41 days i.e. 44% capacity. with 290,496 tonnes processed which at 100% would give a capacity of 660KT/Q i.e. 2.64m/tpa. Which is similar to what I believe we will be able to achieve processing higher grades from underground.

Its interesting to note that the 1,158,809 t processed for the rolling year is also 44 % . Looks like they are working 12 days on 16 days off.

In the middle of last year they started reporting cost in total $ spent for the period rather than $/lb of cu produced. That painted a very quick and clear picture that the grades of their resources are way too low to be viable given their mining and processing costs per tonne of ore handled.




Of particular interest is the

* EBITDA at various grades per tonne of ore processed ( $44.57 ) @ 1.29% , dropping to ($26.54) @ 1.58 % and averaging ($23.80) @ 1.45%

* The mining cost per tonne of ore $84.59 in Sept Q, $60 in the June Q and $65 for the rolling year.

* The processing cost /t running the plant at 44%. $27.94 in septQ $49.59 in June Q and $34.93 for the rolling year..

My assumption that our mining cost will be circa $75 /t seems to be in the ball park.

Our plant seems to cost about $25m a year to run which is $10/t at a 2.5mt reduced capacity with high grade ore. There would surely have to be some labour savings if it only ran part of the time so somewhat less than $20/t. So there processing costs seem to be way higher than ours.

Lets hope the cu equivalent grades that turn up in our resource estimate have a much higher cu equivalent grade than theirs.








One has to wonder if its possible to revisit the cut off grade and redefine a higher grade resource thats an economically viable proposition.

25mt would keep the plant going flat out for 10 years.

They are proposing a giant open pit.

"10-year mine life providing approximately 23 million tonnes of sulphide feed to the concentrator, at an average grade of circa 1.24% copper, with an overall waste-to-ore strip ratio of approximately 7.6:1."

Whilst 1.24% sounds like a viable grade for open pit the strip ratio is possibly posing a few problems. Based on their underground performance they would @ 1.24% have a EBITDA loss of about ($46)/t of ore. With a mining cost of $$84/t and a processing cost of $28/t

An open pit mining cost of $15/BCM is about $5/tonne so mining costs will likely reduce from $84 to $43 @7.6 to 1 strip ratio. That means they will have to save $5/t by running the plant at full capacity to break even.

The not so optimistic version of their spread sheet would be the driver for the " for sale " sign.