Now I see what happened - I hurriedly skimmed the report whilst joining up to the conference call, hence some of the confusion about what ore they were actually sourcing/processing already! Whoops.
They mention about 400 tpd of ore originating from the contaminated stockpile in April, with this increasing to about 1000 tpd in June.
They also mention further enhancements increasing % fraction further through H2.
So, if we assume that say about 600 tpd on average came via the contaminated stockpile for the qtr, and perhaps that settles at consistently above 1000 tpd in H2 and factor in the comments about parts availability etc meaning that it prob was not a consistent throughput so far, then imo it’s probably fair/safe to assume that we have only seen about half of the impact of the cost savings (due to the co-processing) in Q2 that we should see in Q3/Q4. Sounds good; every $ helps.
The talk of “tailings” in the call is what threw me out.
Btw, I also note from the report table that the strip ratio (volumetric) increased significantly from Q1 to Q2, from about 1.5 to about 3.7 !!!
For those unaware, this is the ratio of waste to ore (in the total material mined), meaning that a lot more material was mined to “access” the ore during Q2, adding to the $/t cost of product during Q2.
Based on the 2019 averages as per the annual report: a total of about $34m in mining costs for about 4.625 million bcm total material mined; this equates to about $7.35/bcm or about $2.60/t, +/- depending on assumed density.
Seeing that (in round numbers) it takes about 10t of ore to produce 1t of spod concentrate product, it thereby follows that for every “1” increase in the strip ratio, the flow-on effect is about $26 per tonne of product. In other words, mining an additional 10 tonnes of waste for each 10 tonnes of ore costs roughly $26, and this ore results in about 1 tonne of product.
So, in round numbers, it appears that an increase in the stripping ratio, from say 2 to 3, would add about $25 per tonne (of product) to the cost of production! Significant!
Note to self: Pay closer attention to the stripping ratio when assessing/comparing cost performance in the future!
Btw this figure may need some tweaking depending on where they attribute primary/secondary crushing costs, but imo is a reasonable ballpark estimate.
Happy to be corrected btw, jumping between docs and the calculator on my phone, so may have stuffed something up! Applying the “is that reasonable?” test appears to make sense to me fwiw.
