I agree with you being critical of the Citi Research figures, they are disgraceful and misleading!
If information is correct re: quoting Ottaviano as per this post; https://hotcopper.com.au/threads/asx-today.4771268/page-42287?post_id=75112793~ rather than him hitting out at the short sellers, Ottaviano would have been better to serve the ailing share price by rebutting the content of the Financial Review & Citi Research articles as complete nonsense.
I disagree with some your figures but more so with the company's estimated average cost of FOB A$651 (US$437), as by their admission some metrics are not included & there is some inventive number juggling metrics (imo) that creates a discounted final figure, which leaves a level of uncertainty to what the actual AISC cost to produce Lithium Spodumene per tonne really is.
The A$651 is an estimated C1 cost and not the All In Sustaining Cost which (when they are all encompassing) is the simplest of indicators for deciding with some level of accuracy profit margins versus prevailing Lithium spodumene share price or against the formula used for off-take agreements. The company's, yours and Anatol's figures all exclude numerous inputs to accurately indicate the real All In Sustaining Cost, investors and potential investors need data they can easily understand and if it isn't coming from the Company then they will source from whats available being the likes of the AFR & Citi Research pieces, etc as their fancy graphs and charts makes it easier as a visual rather than sifting through company announcements.
LTR's DFS (2021) and the updated production costs (2023) are quite bluntly not overly easy to follow (for me at least) more so as some components are in A$ whilst others are in US$, but if LTR continue to release (imo) ambiguous content in their announcements then those sitting on the sidelines will remain hesitant to invest.
Both yourself and Anatol are suggesting the mined and stockpiled pre production 567,000 tonnes of ore doesn't get included in the operating costs is quite contradictory to the Company's information in released announcements, quote; "The A$37 million associated with building the 567,000 tonne pre first production ROM stockpiles from the mining operations (which will be included in the Company's operating cost once spodumene sales commence.)"
Basically what you are subscribing to and trying to influence readers of these threads is that as LTR started stockpiling mined ore to the ROM pad in January 2023 in preparation for being a key source of ore to the processing plant over the initial 3 years, combined with mined ore from the open pits and the ROM stockpile helping to derisk the ramp up of underground operations, that those mining costs wouldn't be included in the FOB/AISC to produce Lithium spodumene, and you and Anatol have even suggested it would reduce costs!, furthermore; using that same logic is akin to suggest that if future Open Pit mined ore goes to the ROM pad and not directly to mine then those mining costs would not be included in the FOB / AISC costs because I fail to see any difference?
The A$651 figure excludes;
- A$37 million pre production mining and stock piling = A$62.25dm/t
- Royalties (Stae 5%, Private 2% not including the Tjiwarl component as it isn't / hasn't been disclosed?) @US$800 spodumene price = (US$62.00) - A$92.00dm/t (calculated at current A$0.67)
FYI Royalties at a glance:
- US$1,000 = (US$77) - A$114.17 dm/t
- US$1,200 = (US$92) - A$137.08 dm/t
- (DFS) US$1,392 = (US$98) = A$146 dm/t
*I also cannot find if there was any change to the private royalty % (was 2% over tenements in the royalty deed) after there was a challenge by Drem Pty, so will assume that the 2% is unchanged and included in the royalties above.
~ Royalty of gross sales = 5% (state) 2% (private title) ?% (Tjiwarl Native title) - no information on Tjiwarl royalty?
This takes the C1 cost FOB (my calculations) to A$785.25 (US$527) using royalties calculated at Spodumene US$800 and without any further additions from inclusions of any of the following;
- A$26 million early mine development and acceleration of the expansion = A$ dm/t?
- Sustaining capital - estimated (DFS) A$19 million pa / 511,000 = A$37.18 dm/t (US$24.95 dm/t)
- Growth capital - A$ dm/t? - although I agree this is an option and wouldn't be included as an operation cost until there was (if) when capital is required.
- Site closure and rehabilitation = A$ dm/t?
~ currently has provisions as per the Company's financial reports of A$19 million, some companies include this in their ASIC whereas others don't.
- Mining costs excludes pre-strip and deferred waste expenditure - although they are a mining cost?
- Hasn't included the impact of AASB16 into the C1 costs calculations = A$ dm/t?
- I also believe there should be a deduction in the AISC for Capital & Sustaining capital depreciation?
- Does the A$449 dm/t SC6 cost as shown in the update include estimated A$12.72 dm/t SC6 for underground development & paste fill?
- It is also the little things, from the DFS G&A estimate US$38 dm/t concentrate (A$56.62 dm/t concentrate) versus US$28 from the update (A$39 dm/t concentrate) a deviation & reduction of A$17.62 from FOB.
- Cost of loans / drawdown facilities eventually will be financial metric that "should" be included in cost of production.
** The original DFS had underground mining costs A$45 dm/t ore mined and an AISC US$452 (A$614.72 (using the conversion of A$0.73))
** The project update has underground mining cost A$73 dm/t of underground ore mined, an increase of 62.2%
~ Surprised that transport and port costs have only increased 28.8% from A$69 dm/t (DFS 2021) to A$89 dm/t SC6 - given the mining cost increased by 68%,
- Diesel (when DFS was released) A$1.79 - (project update) $2.35 at Geraldton = 31.2% increase,
- Due to labour / driver shortages, road train drivers were being enticed with $150k - $170k salaries, up from average $120k (25% - 42%) the cost of diesel / truck driver salaries don't impact LTR per sè but it would have been a contributing factor in the tenders for the haulage contracts as well as a financial metric for haulage and port estimates, but it could be possible the transport costs could have been minimised with Cube Ultra Quads being used.
I would appreciate if you are able to explain; if not I will email the Company for some clarity on that and some other items.
- why there is a negative A$23 dm/t for inventory movement in FOB cost estimates?
- what specific inventory are they talking about?
~ I genuinely have no idea what that means, and will remain sceptical of its validity until clarified.
- there is also a negative A$60 dm/t for tantalum credits,
~ there doesn't appear to be any information on how the credit is calculated / applied?
** is it purely just based on the current and forecast price of Tantalum and I understand that it is an extracted by product of the Lithium production thus all cost have been calculated in the processing of Lithium, also knowing the mine cannot produce 30% Tantalum but it is being reported in the DFS as average steady state annual tonnes of 30% concentrate of 428tpa.
~ if credit is calculated @ 428 tpa x US$190kg / 3,110,000 (plant throughput?) = US$26.14, only equals A$38.94 - should A$21.06 be added to the FOB price?
https://www.statista.com/statistics/1009173/tantalum-price/~ no cost (extra?) deviations for transporting to firstly a 3rd party upgrade facility, cost of converting Ta2O5 from 12% - 30% and then transporting product to Fremantle (Port mentioned in DFS)? - will assume that transporting will be included in the Transport Contract.
~ storage facility costs? as converted Tantalum will be bagged, placed into a container before shipping.
~ how much weight is lost converting to 30%?
~ costs for the Tantalum extraction circuit?
I calculate cost at (still missing information highlighted blue from the list above) to A$934.12 (US$626.92 dm/t) using A$0.67 exchange rate and including my revised tantalum credit (A$38.94) & excluding (fluffy imo) inventory movement credits.
What is the real All In Sustaining Cost to produce spodumene at Kathleen Valley?
Each and every car manufacturer and storage company are on the cusp of using SSB (Solid State Battery) in their respective applications, Ganfeng started mass production of SSB's in May 2023. Replacing the electrolyte and separator, solid state cells use a separator made of ceramic, glass or polymer composites.
https://thechinaproject.com/2023/05/23/ganfeng-lithium-has-announced-mass-production-of-solid-state-batteries/
News articles
https://www.arenaev.com/mg_ready_to_introduce_solidstate_battery_in_2025-news-3893.php
https://au.pcmag.com/batteries-power/106520/samsung-to-mass-produce-solid-state-batteries-for-super-premium-evs-by-2027
Apart from being far more robust and compact in the absence of liquid electrolyte to cool them, the other huge benefit of solid-state batteries is there is said to be a much lower risk of explosion and fire, enabling them to tolerate the higher temperatures associated with ultra-fast charging.
What should be of interest to shareholders of Lithium stocks during this current dismal climate, the SSBs' use 35% more Lithium but less Cobalt and Graphite.
https://www.carsales.com.au/editorial/details/nissan-locks-in-first-solid-state-battery-powered-ev-for-2028-146065/
https://www.volts.wtf/p/whats-up-with-solid-state-batteries
https://www.carexpert.com.au/car-news/chinese-ev-brand-launching-solid-state-batteries-with-1000km-range
https://cleantechnica.com/2024/07/12/new-quantumscape-solid-state-ev-battery-exposes-ev-sales-flop-fakery-again/
All the above calculations and estimates are based on my opinion/s and understanding of the content of Company announcements & more than happy to be corrected .. .. ..
cheers
(20min delay)