The share price has taken a bit of a hammering since the release...

The share price has taken a bit of a hammering since the release of the DFS, from 61c to the present 48c a 21% drop.

On first glance, the DFS did produce very different numbers to the PFS, however delving deeper, I thought it was quite a good DFS.

It is well worth your time listening to the Webinar - or at least the 1st half linked above.

I think if investors didn’t expect a capex increase, they’ve had their head in the sand the last 10 months since the PFS was done.

PLS had a 36% blowout in capex for their P680 project (100kt expansion), LTR also had a massive increase to their DFS figures.

Leo in W Africa had it’s capex increase by US$30m to $285m, for a similar sized plant our $185m looks quite reasonable.

Personally I was expecting about a 15% increase.

A 15% increase would take it from the PFS $124m to $142.5m

But then they’ve increased the plant size 2mt to 2.7mt a 35% increase

A 35% increase on $142.5m brings it to $192m

That is already higher than the DFS $185m

Admittedly a 35% increase in plant size doesn’t necessarily equate to the same increase in cost.

However there are other extra costs in the DFS such as the $15m for modular DMS.

This modular DMS lets them process & earn income about 3 months earlier earning $100m from sales + $64m for the secondary lower grade product.

Part of this can be put towards the capex shortfall. Yes they could save the $15m by not doing this, though as you can see the reward makes it well worth their while.

There were other enhancements in the DFS, such as the 3 streams of different sized material to the DMS units enhancing recovery, the larger pit shell allowing a higher percentage of Reserves to be used in the modelling, which increases the geological confidence in the project. This was at the expense of a higher strip ration adding to mining costs.

They also explained the payback time increasing to 19 months.

This is measured from the start of production using the modular DMS units, it would be akin to measuring Liontown’s payback period starting on their 1st DSO shipment.

The modular units allow revenue generation much earlier than the PFS allowed (which didn’t use this modular or DSO) hence artificially increasing the payback period.

Opex increased to an AISC of $610/t & a C1 cost of $377/t (after 2ndary credits). Not as good as the PFS but certainly low cost compared to peers.

IMO this sell down is over done, I’m certainly taking the opportunity to top up at these prices.