I had a listen but this is the key starting basis:
1. Last year's MET tests had recoveries 50% - 55% recovery in DMS alone from 3.35mm crush size and 20% - 25% recovery from floatation making total recovery 82% - 83% recevory.
2. A key comment relates to what he said specific gravity - he stated 2.9, key comment.
3. Below is the Table from yesterday's announcement:
4. At three when they talk HLS 2.9,they are really talking about ensuring your DMS (or heavy liquid separation) equates to an element of the specific gravity of the spodumene you are trying to separate - here been spodumene, essentially meaning at 3.35 crush size can now extract 6.63% Li20 at a 70.4% recovery rate. Setting the density at 2.95%, which is above the specific gravity of spodumene at 2.9, whilst it increases grade to 7.26% Li20, reduces recovery to 59.8%. A bigger key is the DMS MET tests results are higher/better than point 1 above for initial 2018 tests (albeit the key in any comparison of like with like is whether the feed ore for the 2018 Met tests was similar to the feed ore for the 2019 tests, and from recollection certainly the 2019 feed ore for the METs had lower Fe203 content for example). A key though is with floatation, when based against 1 above, probably looking at theoretical recovery of some 90% btw. (eg: you would also have a separate process for recovering your tin/tantulum using their specific gravity).
5. First VB drunk - when will I finish typing
6. Going to benefits of straight out DMS, obviously an opex and capex cost but needs to be balanced against lower recovery rates. I simply note the podcast did talk about adding units in due course (I assume meaning floatation), possibly due to the comment that whilst AVZ can supply the chemical grade market (batteries) it won't be able to supply the full suite of technical grade markets (i.e. ceramics was one singled out) by a DMS unit alone (possibly because the Fe203 content whilst good for the CG market might not come to scale for some TG applications) - but because NF inferred a only DMS process can still supply some TG applications this gives me some 'comfort' the MET tests in the concentrate produced are less than 0.7% Fe203 from DMS alone (but need to await results) which certainly is good for the spodumene feedstock for the battery grade hydroxide market. Here is a post on TG/CG for anyone wanting to understand what I am blabbering on about here - Post #:
399570247. In terms of opex and capex I dealt with these yesterday as did
@setfire2thehive so here are some of my posts in that regard. Refer: Post #:
39971525 and Post #:
399736688. A key comment made, which I have been able to back is that at 1.6% Li20 and recovery of 80% you need 4.8 tonnes of ore to produce one tonne 6% grade spodumene. This related to 1 above, meaning with floatation for a 2mtpa ore feed operation can produce 420,000 tonnes of 6% grade spodumene. At 60% recovery now need 6.3 tonnes of ore, which means your 6% grade spodumene output falls to 320,000 tonnes 6% grade spodumene. That is the balancing act between recovery rate through a floatation circuit and one without (revenue wise), which then needs to be balanced against opex and capex costs.
9. 2nd VB drunk. Still typing, need to stop.
10. The best place to start for me was where I did some numbers a while ago - that was back with the SS back in Sept 2018 just to guage impacts and yes I know things have changed, likeprice but the point is simply seeing how that SS would have been impacted by a DMS only option. The Sept 2018 Ann was for a 2mtpa ore feed operation. A while ago I (sort of) duplicated AVZ's initial Sept Scoping Study so will start with that - refer Post #:
36063871 and the table below and apologies for any errors therein but a start to teh madness in comparisons as need to start somewhere - you can see the model I did below I got to their own pre tax IRR of 90% and post tax IRR of 57% - see Post #:
36050143. For avoidance of doubt using last years model because I would need a few slabs of VB to work my way through the latest SS, but trying to show a point here.
11. I recognise the above is a total guess and might have errors, but lets start with reducing the capex by $40 million - roughly 25% of initial capex plus contigencies - given NF quoted that type of number in teh podcast and then reduce mine opex costs by another 30% without flotation (a guess as NF didn't yabber what the reduction was but you can get a guage what opex costs might be from 1 above). But tonnages because of lower recovery also fall from the 440,000 from last year's SS to now about 328,000 tonnes ( a reduction of 25%) at a 60% recovery assumption.
12. And as I thought the lower recovery rate through a DMS only option if inputted into last years SS, despite lower capex and opex leads to the IRR of the project potentially remaining unchanged or not that significantly different to an option with floatation but the outcome could simply be because of the assumptions used - using the addumptions at 11, pre IRR and post tax IRR has remain unchanged in my calcs assuming the same price and transport assumption as last year's SS. In doing this analysis I know the $920 spodumene price is too high today but just wanted to crystalise what they are doing in my own head. See below
13. 3rd VB drunk, and now making less sense. Contemplating and ending, good idea as post too long. The reason for what they are doing IMO is to reduce financing costs IMO - basically I see this as AVZ's option of we are going to mine this ourselves if can't get equity for Offtake Agreements and the best way to do that is reduce our funding needs, but if get funding through equity for Offtake Agreements I suspect they will move to floatation in the process flowsheet IMO (because that option is not closed as the podcast talks about adding units later on which I suspect is a floatation unit). Reason: at the end of the day AVZ wants to produce as much as possible from each 2mtpa installed ore feed facility, so I see this as a strategy by AVZ to maintaiting IRRs where they are at (with and without floatation, but obviously retrofitting floatation if start without it in a process flowsheet) and enter market as quickly as possible. Obviously lower capex spend also means less build time. Outcomes above could be a fluke event of creative analysis, but anyway would be interested what others think and if they have turned their minds to a financial analysis of pros and cons etc etc etc.
14. Contemplating whether to have a 4th VB, yeah why not. No more posting tonight.
15. All IMO IMO IMO
(20min delay)