Interesting discussion. Start-up operations are inefficient, so...

Interesting discussion. Start-up operations are inefficient, so clearly the production cost per ton should drop as these inefficiencies are ironed out. I think Rocket is partly correct in that if they are not ironed out and volumes don't get to nameplate, prices well above the DFS would be needed. That said, its an extremely rare start-up that is highly efficient from day1, so an above DFS average cost for the first few quarters is likely.

The DFS was providing for a US$2.91/dmtu cost at 365ktpa of production (33% grade). It was therefore providing for US$35m/yr of costs (A$50m/yr @ 0.70). The current quarter was $8.924+$1.107+$0.438 = A$10.469m. This would appear to mean they have about A$2m/qtr of additional costs available to increase production from close to 60kt/qtr to 90kt/qtr. If there were no efficiencies to be had on Q3 costs, there's a problem. Some of the costs within the $8.9m are going to be semi-fixed and not scale to the same extent production does so there should be efficiencies. E25 are still looking to get to name plate throughput, so Q4 is still going to be below 90kt. Costs are therefore still going to be higher than DFS in Q4. Q1 of 2022 may be the first period to get a really good gauge on long-run stage1 costs.

Also the first shipment appeared to take a long time to load at a time when shipping costs were also very high. This may have created extra costs for E25 within the $8.924m. If it did, some cost efficiencies will come from revised processes. Overall, something to watch carefully.