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Ann: Progress Continues at the Manono Lithium and Tin Project, page-122

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Scarpa

9,068 Posts.

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16/09/19

11:41

Post #: 40435215
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Originally posted by Scarpa: ↑

Short version if don't want the working
1. suspect tin credits as an offset against transport costs - in aprofit sense - are US$25 to US$30 per tonne of spodumene concentrate exports. With tantulum and tin credits, US$40 to US$50 per tonne on a profit basis.

The details
Ihave found this an intriguing discussion so thought I would have a gomyself. Personally I think 8horse and SF2TH are actually potentiallystarting from the same basis of $85 per tonne for tin credits per 0.5%concentrate unit.

Revenue - commencement
8horse, in your earlier post to this thread you calculate tin production at1146 tonnes for a 2mtpa per annum ore feed facility and with price at US$17,000per tonne this in effect gets you to US$19.482 million in revenue. Whilstthere is a problem with the methodology of getting to $ per tonne in my opinion by just taking the MET tests above at face value (see below) and transposing them to tonnages, the 2017 MET tests were actually showing concentrate of0.5%, i.e yes I know it includes floatation, or another way to put it the equivalent of 229,200 tonnes of tin concentrate grading 0.5% which I know is not the way to look at it but want to keep this simple, and when you convert that you get US$85 per tonne revenue (i.e. 19.482 million/229,200),hypothetically.

IMO 0.5% tin concentrate in the MET tests is not what people think it is btw asthat is not what they will be exporting because think freight task btw - what I think the 0.5% refers to is the amount of SnO2 they can extract from the amount of tonnes of ore they need to produce one tonne of 5.8% spodumene concentrate(which is what the 5mtpa study was based on been getting 5.8% Li20).

Smelter and refining costs
The reason why I use the term hypothetically is because from a tin smelter point of view - i.e. who is buying your tin concentrate - they have treatment and refining costs so if the smelter is going to cop low grade SnO2concentrate then the price for your concentrate is definately the Sn% in the concentrate minus smelter costs. Now the reason why I use hypothetically is I doubt AVZ would be selling 0.5%tin concentrate, apart from the transport task involved hence why the reported smelter tests need to be interpreted a little more broadly IMO - what will be sold IMO would be a higher grade tin concentrate product which means some additional processing costs by AVZ, so read additional opex costs but then the credit itself is through spreading that tin revenue againstthe transport costs for exporting spodumene concentrate, i.e if you sold onetonne of tin concentrate for $100, and you had 10 shipments of spodumeneconcentrate the tin credit on transport costs for each tonne of spodumene soldis $10. From the following link - https://www.internationaltin.org/sustainable-production/:

"Once a tin concentrate of the required purityhas been obtained (55 to 75% SnO2), it is sent to a smelter who smelts it intocrude tin metal by removing the oxygen from the mineral. Many unwanted impurities are removed in the slag during this process, but additional remaining impurities are treated in the refining step (e.g. by heating under particular conditions in a cast iron kettle, or by electrolytic refining) where eventually, the refined tin of desired purity is cast into ingots for sale."

I would be suggesting our work stops at concentration, and the steps we do will probably get to a product of around say 60% to 75% tin in the concentrate sold. I can't see AVZ doing smelting or refining so the price we get will be a a lower element of the tin price:
See: http://www.agiboo.com/commodity-knowledge-center/commodities/tin/

There is little information available of smelting and refining costs for tin, but suspect they would be in the range of copper - about US$500 per tonne of contained metal. To illustrate costs from this post in another thread by me: Post #: 39893164

Offset deduction for tin
Or another way to put it, if your concentrate grade is 50%, then 50% * tin price is US$8,500 per tonne minus US$500 equals US$8,000 . Lets leave another US$500 profit per tonne in the smelter, meaning price paid US$7500 for 50% concentrate.

Or returning to the post of 8horse, if tin tonnes are 1146 Sn not SnO2, or 2292 tonnes contained SN at 50% - 60% concentrate, i.e. 1146 *2, then deduction of smelting and refining costs is US$2,000 tper tonne of contained metal, or US$2.3 million. So expect the smelter, hypothetically, to pay AVZ roughly US$17 million for the tin from the 2 mtpa operation. At 80% recovery using floatation at 1.6% grade you produce 425,000 tonnes of 6% grade spodumene (which means a starting transport credit of US$40 per tonne. (i.e need 4.7 tonnes ore for 1 tonne 6% grade spodumene)

At 65% recovery, firstly your tin production falls. Hypothetically, $17 million * 65/80 = US$14 million, but because your spodumene tonnes also fall (now need 5.8 tonnes of ore for 1 grade spodumene), get to 345,000 tonnes 6% grade spodumene, meaning a starting transport credit of the same US$40 per tonne of spodumene export.

Obviously the total benefit neeeds to also include the addition opex and capex cost so probably looking at a transport cost ofset from the tin credits, IMO, of about US$25 to US$30 per tonne of spodumene concentrate export.

Now for tantulum
Obviously a similar process for the tantulum credits.

A good way to explain the above is to look at PLS - there last quarterly in effect showed tantalite concentrate production of 81.70 tonnes - Table 2 data is inpounds btw in their Ann so need to convert to tonnes - refer PLS Post #: 39681736 - meaning inthe dedicated part of the flowsheet for tantalite what PLS does is increase the concentrate grade it sells from their own MER test results. In this link it is clear the concentrate grade in PLS tantalite that is sold isaround 25% - 30% in the concentrate, noting that tantalite grades only 150 ppmin the PLS resource itself (i.e - 0.015%, or assuming PLS is able to achieve its Li20 recovery rate of 77% in its DFS for its its ore of 1.26% Li20 itwould need 6.2 tonnes of ore to produce 1 tonne 6% grade spodumene, and using ame recovery as a result produce 0.07% Ta20 in the concentrate from that orefeed: page 1 http://www.pilbaraminerals.com.au/site/PDF/2072_0/PilbaraSignsTantalumOfftakeAgreement

In total, I suspect that been able to extract tin/tantulum is likely to give AVZ an offset against transport costs (against the actual total costs of its production - i.e. profit) in teh order of US$40 - US$50 per tonne of 6% grade spodumene exports

Understanding the MET tests
Please correct me if I am wrong.

Going back to your post SF2TH, i'll take the top line in that table been for hole 1, which had a initial feed ore of 1.76% Li20, in effect saying need around 4.1 tonnes of ore to produce one tonne 5.8% grade spodumene at an 80%recovery rate. From that 4.1 tonnes of ore you get I suspect the 0.5% Sn02concentrate they are yabbering about at a 83.3% recovery rate and feedstock of0.152 SnO2 (i.e. 4.1 * 0.152 * 0.833). Not precise as don't know the actual inputs fully but get close - i.e. I get 0.51.7% SnO2. But to get to tin content need to multiply 0.5% by 78.8% which gets you 0.4% payable Sn. If your asking where the 78.8% comes from it is because 78.8% of SnO2 istin, which is what the smelter pays you for, been payable tin - see https://www.convertunits.com/molarmass/SnO2

(As an aside the second core in the 2017 MET tests had Li20 content of 1.4%Li20 so need 5.2 tonnes of ore at 80% recovery to get to 1 tonne 5.8%grade spodumene, so with SnO2 feed ore grade 0.092% you get to there SnO2 of0.37% at a 76.8% SnO2 recovery rate in your table: 5.2*0.092%*76.8%recovery = 0.37% SnO2 (get the same 0.37% SnO2 as as reported). Actual payable Sn is 0.37% * 78.8% = 0.29% Sn.)

(Note: If you used 4.1 tonnes for the top line of SF2TH post and 5.2 tonnes for the bottom line and went through the calc for tantulum you would get to there calcs to - i.e. sample1: 4.1*0.003* 84.4% = 0.010% Ta2O3 etc etc forbottom line)

So if the overall AVZ deposit actually grades 1.6% Li20 and Sn grades 0.0836%(see page 20 of Post #: 38703355),or essentially 0.106% SnO2 (.0836/.788) then with floatation and now using 80%recovery get to 0.39% SnO2, but payable Sn = 0.31% . You need 4.6 tonnesof ore to produce 1 tonne 5.8% grade spodumene at 80% recovery rate. Yourmaximum revenue for equivalent Sn becomes 0.31% * 17,000 = US$52.70before smelter deducts and additional opex so profit may not be as significant as many of us think. So might be looking at profit of US$20 - US$30 per tonne of equivalent 0.31% SN (noting obviously really looking at much higher concentration in the concentrate but credit spread out against transport costsof spodumene tonnes). And need to add tantulum.

Obviously without floatation, i.e. now only using DMS only, your recovery rateis less so now take the above but have a recovery rate of 65% for spodumene and tin. You now need 5.6 tonnes ore to produce 1 tonne 5.8% spodumene conecntrate, and through that still get now 0.31% Sn concentrate, (i.eStill about US$53 per tonne of equivalent 0.31% Sn concentrate from 5.6 tonnes ore feed). But overall because you now need 5.6 tonnes of ore in effect your revenue from 2 mtpa ore feed facility reduces by 18% (4.6/5.6 - 1), and thatmight put into question the extent of profit to be made from tin (especially asan offset to transport costs).

Conclusion
The above is my workings. If others have a view share calcs. I did these last night,including some crappy writing, was about to post then but had one VB too many LOL and this morning they make sense too me still, which might be a problem in itself.

Anyway, the DFS will tell the full story but just providing the above to say that the transport credits may not be as high as some think, but still good enough. Given the 5 mtpa SS study, with the above I am essentially suggesting an all in FOB opex cost for AVZ, including transport credits, of around the US$290 per tonne mark to US$300 per tonne mark, since the SS itself was rabbiting on about US$321 per tonne from recollection. The 5mtpa SS talked about a US$323 FOB opex cost, excluding credits.

All IMO IMO IMO IMO

Expand

@binwood, In this linked post I posted that I didn’t think tin credits will be to the extent as previously assumed by many. I also make the comment that all hard rock miners have been overstating credits, when converting to a profit basis. I will go through the latest Ann to see how they change my estimates as previously assuming a US$20 per tonne - US$30 per tonne credit. Doing calcs is also a little more complicated than some put down as well. Recovery is also a function of process so will be interesting what final recovery rates are.

All IMO

AVZ Price at posting: 5.0¢ Sentiment: None Disclosure: Held
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