How do you arrive at $250/tonne operating expense for Spodumene?

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cyoujames

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03/04/17

17:36

Post #: 23823201
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Originally posted by maverlim ↑

Production

- Spodumene Concentrate = 120,000 to 160,000 tonnes per annum (average 140,000)

- Tantalum Pentoxide = 300,000 pounds per annum

Before processing, these ores are worth

- Spodumene Concentrate = US$900 per ton

- Tantalum Pentoxide = US$60 per pound

Total worth per annum (before accounting for operating costs)

- Spodumene Concentrate = US$900 per ton x 140,000 = US$126,000,000

- Tantalum Pentoxide = US$60 per pound x 300,000 = US$18,000,000

Total worth per annum (after accounting for operating costs)

- Spodumene Concentrate = (US$900 &ndash US$250 per ton) x 140,000 = US$91,000,000

- Tantalum Pentoxide = (US$60 &ndash US$30 per pound) x 300,000 = US$9,000,000

The infrastructure is mostly in place or funded by Tawana Resources, so Alliance shouldn&rsquo t incur too much of a cost here.

Total operating profit per year about US$100,000,000 or S$140,000,000

Alliance Mineral 50% share in Joint Venture = $70,000,000

Additional expenses for Alliance Mineral assuming $5,000,000 (tax, administrative etc)

Net Profit = $65,000,000

Assuming a 8x P/E ratio, same as Galaxy Resources = Market cap to be about $520,000,000

Target Price = $520,000,000 / 480,000,000 shares = $1.08 per share.

Well, above is an ideal scenario. Execution risks poses a serious threat as well as offtake agreements. An also, if the disclosed data are not what they actually are.

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How do you arrive at $250/tonne operating expense for Spodumene?

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How do you arrive at $250/tonne operating expense for Spodumene?

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