Ann: Ewoyaa Definitive Feasibility Study, page-4

The London market hasn't liked it.

Without doing the calculations (a weekend task), it looks as if the IRR/Payback aren't like-for-like.

• In the pre-feasibility study they started around the commencement of the DMS and may have allowed for a couple of month ramp-up period.
• In the feasibility study they appear to start around the commencement of the modular DMS revenue and perhaps 1yr before the main DMS plant is complete. They are therefore hindered by a year of lower modular DMS only revenue which severely pulls down the IRR and payback. If they were measured as in the pre-feasibility from the commencement of primary production, they would again be specular

Pre-feasibility: Using some rounded numbers and ignoring smaller details like byproducts, the pre-feasibility study used year1 Spod prices of $2,300/t. With a cash cost of $278/t this enabled circa $2,000/t of 1st year profitability. 255kt of sales provided $510m of annualised net revenues and a payback measured in months on the $125m capital cost. Ignoring the commissioning period, the payback is 3 months.

DFS: This study now assumes year2 Spod prices of $2,557 SC6 & $2,227 SC5.5. With a cash cost of $377/t net of secondary product credits the year one blended margin is circa $2,000/t for 1st year primary production (called year2). The year 2 volume is 290kt so these sales provide $580m of net revenues and the payback of the $185m of capital is measured in months from the commissioning of the primary DMS. Ignoring commissioning rampup, the payback is 4 months.

You however get this oddity that adding the modular DMS helps cashflow but brings forward the starting point for calculating payback/IRR making these figures much lower and the reported payback is now 19 months. The IRR which on a like for like basis is probably still around 200% is now quoted as 105%.

It might take a few hours or a day/two before the financial boffins have a chance to properly rework the numbers and realise that this isn't a collapse from what was originally presented. After initial commissioning, add the flotation circuit's 80ktpa (of over 5%) grade and you are looking at over 400ktpa of Spod production.

Assumptions like well we will stockpile inferred material for 5 years and then process it may be a nice conservative assumption for modelling but is when modelling and real life depart. If Atlantic pull 1% ore from the pit, they are going to process it straight away regardless of whether this 1% came from an area called "inferred" or from an area called "indicated", "proven", "probable" or "measured".