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14/01/16
14:43
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Originally posted by jazzmox
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I think many people here are clinging to the notion that since SMM are fighting for it then it must be worth billions.
We've been over this before. SMM have no interest in Isabel as a stand alone operation. So why do they want it? To extend the mine life of their whole operation. They aim to spend $2 billion producing nickel onsite. Why is that so expensive? Because extracting nickel from the laterite is a very expensive process requiring huge and sophisticated plants.
Hence nickel sulphide is always more valuable and hence comparing AVQ to SIR is fruitless. A good grade nickel sulphide mine can be 1km underground and still be better and cheaper than a nickel laterite asset on surface. We are talking $500m capex compared to $2 billion.
So if SMM want to spend so much money then the longer the mine life the more sense it makes to spend billions. The more ground the better. It's all about gaining ground for feedstock and not because they valued Isabel.
Also, they do not need high grade ore so 1.2% will do fine.
A DSO operation is completely different. Its a bulk operation where you ship only the ore and someone else will have to extract the nickel from the laterite.
You should ask yourself why years of government tenders have gone unanswered. This asset is well known for decades. If SMM thought Isabel was worth billions then other would have as well and it would already have been developed. People here claim only little AVQ were able to woo landholders where BHP et. al. failed.
Btw, 2% and 20% is the same if you produce nickel onsite than if you ship only the ore. So the landholders are not getting any better deal than they would have with a major. 2% of $1 billion = $20m. 20% of $100m = $20m
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Ok thanks for your reply Jazz, I guess that's explains they were so keen on land banking all the leases, I guess for SMM it was a shame Axiom came along and offered a fairer deal to the people of the SI, no wonder they are fighting so hard it not only decreases their mine life but also there profit margin by 20% as you can imagine the other local tribes will want a much better deal now.