ann: quarterly activities report out, page-40

Bobminer said;
“At the present time there has been a great deal of excitement amongst IDC shareholders about bonanza grades at their Mt Kare deposit in New Guinea, which is extremely remote and will cost a small fortune to develop. Its still I believe a potential giant.”

I had a look at their quarterly. Promising looking project, but it does look like a classic example of a remote location and 3km above sea level with very high rainfall.
That won't stop them from mining if the numbers stack up.
From their quarterly;

“While expenditures on the Mt Kare project are significant, due to the climate, location and helicoptersupported
nature of the exploration and development activities, the company has accelerated the
development programme, given the significant upside potential that has been demonstrated.”

When a company states that expenditures are “significant, due to the climate, location and helicoptersupported
nature of the exploration and development activities” you can expect it will be a high cost project to develop.
According to the pre-FS it will be $US218mill ($262mill if owner fleet) and a further $95 mill after the initial capex for expansion. Total LOM capital $357mill. (We will start well below $27mill).
The initial up front capex is more than double their mc. So they will either have very heavy dilution or a very large debt or more likely a combination of both.
ABU have given guidance of neither being necessary, with cash on hand expected to be sufficient to get us into production and the pilot plant being able to self fund expansion.
For those that think we might need to raise any money, then it will either be a very small debt -repayable within a month or two of the potential $50-70mill cash flow from GH (expected to be mined over a three month period) - or cr which would likely be only a small dilution of less that 10%. Either way not an issue for our valuation and insignificant once we start producing.

I remember a few comments on ABU’s project being remote, but there’s no comparison.
We already have an airstrip and vehicle access to site, with public roads nearby and flat country with no problems getting drill rigs on site.
About the only thing we lack is grid power but with only a 300,000tpa gravity plant, generating our own power is not going to be a significant issue or cost. Power requirements will be relatively very low.
Plenty of much larger, power hungry, mines use diesel generators with much lower grade ore and much higher processing rates.

Distance from rail or ports makes no difference if you’re not transporting large tonnage bulk product such as base metal/precious metal concentrate or iron ore, coal etc.

Pre-tax IRR of IDC is 28% with a 4 year payback. That will likely be improved on with further exploration.
We have a return of $257 mill on $27mill in just 2 years in our scoping study. Work out that IRR!
Our $257 mill is likely to be revised up to at least $400mill in a month (IMO) and more like $600mill including u/g mining.

I enjoy comparing ABU to other companies because every time I do, ABU stands head and shoulders above the rest with grades, margins, very low capex, metallurgy, very low processing risk, low sovereign risk and return on investment.