Hi Multi, the Peko project is high grade 65% iron ore concentrate. Its only a small project of 3.75 million tonnes of tailinsg which comprises of 70-80% magnetite which is already stockpiled. Therefore no mining costs, just load the tailings into the plant where it will be washed and magnetically separated.
Trucking distance is 12km to the railhead and then transported by rail.
"Trucking from mine site to railhead should be accomplished at A$2/tonne maximum as its only 12km."
Rail transport Tenant Creek to Port of Darwin is 1,000km. The basic cost of rail is 4c/t/km but this could be cheaper if ELE gets a good deal. Therefore allow A$40/tonne to Darwin.
Shipping costs from Darwin is the cheapest from Australia due to location.
I'd suggest that small shipments to Malaysia or Vietnam would make the most sense.
Shipping by Supramax should be under A$40/tonne. this is slightly less than I've allowed for earlier as the shipping prices have gone down.
The project stacked up at US$150/tonne and now the price on Friday is US$200/tonne. approx A$280/tonne.
ELE gets paid a monthly fee of A$150,000/month and US$2/tonne royalty.
ELE gets 25% of remaining profits.
I see an overall cost of A$150/tonne ( processing, truck, rail and shipping).
ELE gets paid A$1.8million + royalty on 350,000t x US$2/t (A$980,000) =A$2.78million.
Profit on 350,000 tonnes at A$280/t - A$150/t = A$45.5 million
- $2.78 million(ELE) - $4 million (Gov't royalties) = A$38 million Profit
25% profit share = $9.5 million.
Not a huge amount but its only one project for $23 million MC company.
Plus there is still gold, copper and cobalt in the remaining tailings.
ELE Price at posting:
2.9¢ Sentiment: Buy Disclosure: Held
(20min delay)