Comparing announcements, I also notice that in the 2015 DFS only the ARP was off balance sheet as BOOT and the stage 1 CAPEX of $856m included the Titanium plant
Production was assumed at 3Mtpa for stage 1 to increase to 6Mtpa for stage 2, which would have costed $793m. Total CAPEX stage 1 + 2 excluding EPC and contingencies = $1.649bn
2017D DFS moves the Titanium plant off balance sheet to reduce stage 1 CAPEX and increase OPEX, while stage 1 + stage 2 capex is still high at $1.717bn for a 6 Mtpa production
The 2019 single stage optimisation reduced operations to 2 Mtpa and total CAPEX to $824m. No stage 2 CAPEX requirements.
This reduction in production was agreed with KfW to increase chances of closing finance at the target debt/equity structure and minimise dilution for existing shareholders. I cannot see a direct reference to BOOT agreements here but I think these are the lease repayments of note 2. Hard to imagine that KfW would have had nothing to say about this assumption.
Considering German Titanium Dioxide specialists Ti-Cons are already contributing the pigment production technology including engineering,construction support, procurement support, training, commissioning, process and product guarantees I am inclined to believe that the titanium plant will eventually fall under the scope of German financing and be kept on balance sheet. Just IMO.
As for the other components, I suppose the credibility of the BOOT assumption revolves around BOOT repayments being attractive enough for a third party to have an operational profit out of this. Either way they don't seem to increase operating costs prohibitively - OPEX increased only from $167/t to $185/t when moving the titanium plant off balance sheet in 2017 vs 2015, so there is certainly some leeway to make the proposition attractive.
Having said all this, the costs of capital equipment previously assumed supply from low labour cost Asian countries. Fair to assume that these will be mostly German made now so the CAPEX figures are bound to change.
We can only wait and see...
TNG Price at posting:
8.9¢ Sentiment: Hold Disclosure: Held
