There's a South Australian graphite project at DFS stage planning on building a ROM stockpile up to 27Mt when the processing rate is only 1.6Mtpa. This ROM pile would also be low grade material. For the later years of the projects life they then run down this ROM pile. It just doesn't make sense to me that you would spend the sort of money necessary to build to build a 17 year ROM stockpile of low grade material. I can see a possible P&L accounting reason - what's really waste is called ROM inventory so you can take expenses out of the P&L and call them inventory but it has cash flow implications.
If prices are super strong, why don't you just accept the higher price of beneficiation of low grade material? If prices are not super strong, then there's a huge problem financing the building of inventory that won't generate cash flow for in some cases decades!!
From a practical perspective I'd have thought material was either waste or good enough to process from day one. If its not good enough to process the day its taken from the ground, aren't you kidding yourself to think it will have value 10-20+ years later?
So the queries: Are you aware of any other projects that have or plan is to build huge multi-year ROM stockpile? Are you able to shed any light as to why its sensible to build a 17 year ROM stockpile?
EGR Price at posting:
19.0¢ Sentiment: None Disclosure: Held
