Afternoon all, Great to see the Tin cash settlement steady...

Afternoon all,

Great to see the Tin cash settlement steady again, just shy of US$30k/t.






To put things into perspective a Tin cash price of US$29,540/t implies a staggering US$19,585/t net improvement to AVZ's April 2020 DFS price assumptions (US$9955 over LOM).
$19,585 * 75,358t = US$1.47 billion improvement to the bottom line over a 20 year LOM - soon to be upgraded btw to ~28 years i.e. post pit optimisation (assuming all goes to plan).

Just to repeat:
Tin credits at the current cash price of US$29,540 /t provides ~US$1.5 billion in additional Gross Profit i.e. over and above AVZ's April 2020 DFS assumptions.

Have updated my previous calculation based on forecasted SC6 production for LOM and below we can see that Tin (as a $29,540/t credit) reduces Manono's MAIDEN DFS cost of SC6 by US$157/t (from US$371/t to US$214/t), confirming AVZ's potential to easily become THE WORLD's N0.1 LOWEST COST SC6 producer, and a staggering $77 p/t below Greenbushes' US $291/t.



Below are the US$214/t calculations (figures as per AVZ's DFS or where not available, my cost assumptions as indicated):

Tin production and revenue

Roche Dure Tin production over 20-year LOM: 62,699 t
Artisanal Tin production over 20-year LOM: 12,659 t
Total Tin production: 75,358 t x US$29,540 /t = US$2.226 billion in revenue (Tin credits)

Artisanal Tin processing costs = US$76 million over 20-year LOM (refer to table 3, Page 6 of 20 of DFS Summary). $76 million / 12,659 t = US$6000 /t
Roche Dure Tin processing cost est. (assuming same cost/t as Artisanal Tin cost/t here as Tin processing costs at RD are integrated into overall OPEX & therefore not available as a standalone OPEX estimate)
= US$6000 /t x 62,699 t = US$ 376.19 million over 20-year LOM.
Total Tin processing cost est. over LOM: US$452.19 million

SC6 only costs over LOM: US$4.208 billion (refer below table)
US$4.208 billion / 11,354,174 t (SC6 production over 20-year LOM) = US$371/t (also below)



SC6 costs per tonne after Tin credits:
US$4.208 billion (total SC6 only costs over LOM as per the above DFS table)
+
US$452.19 million (total Tin processing cost est. over LOM based on US6000/t):
-
US$2.226 billion (total Tin credits over LOM based on US$24,500/t Tin price)

= US$2.434 billion

US$2.434 billion / 11,354,174 t (total SC6 production over 20-year LOM) = US$214/t = World's lowest cost SC6 producer.

A much lower Tin price of US$23,872/t (over LOM) still theoretically covers ALL SC6 cost inputs at Manono, excluding transport. However at US$29,540/t, the Tin credits cover a nice little chunk of the transport costs as well (~US$38/t).

However if that somehow wasn't enough , Lithium's jewel in the crown (Manono) potentially has much more to give. Importantly, the US$214/t theoretical cost (of SC6 production less tin credits) DOES NOT INCLUDE FOUR other likely key improvements (IMO) to AVZ's final cost per tonne estimate prior to construction, commissioning and production. These potentially very significant cost per tonne savings are IMO likely to come from;

1. Pit optimisation (including conversion of wedge resources into reserves and lowering the overall strip ratio from 0.4:1 to 0.3:1 - following completion of current drill campaign and assay results due Q1)

2. Transport - significant discount / savings to the standard transport rate cards - currently US$252/t avg.

3. Throughput - an increase via targeting a higher grade feed into into HPGR provides potential for a 10-15% increase in throughput, further lowering the cost of SC6 production on a per tonne basis.

4. Tantalum / Niobium credits - not included in AVZ's April 2020 DFS calculations

So, as you can see from the above initiatives and potential outcomes, AVZ is on track to easily become THE NO.1 LOWEST COST SPODUMENE PRODUCER ON THE PLANET (IMO) - potentially producing SC6 in the US$100 - $170p/t cost range - while producing one of the most consistent, cleanest, purest, & lowest-carbon footprint products on the market.

However, a reminder that the increase in profitability opportunities for AVZ go well beyond the lowering of the overall cost per tonne of SC6.

Additional profitability opportunities include a planned PLS Train 2 (an additional 20ktpa to produced on site), a possible 25ktpa (expandable to 100ktpa) Lithium Hydroxide plant / JV (i.e. potential for 'in-house' LiOH production - results of study expected within the next week or so, electrification of mining equipment, renewable energy onsite and significant SEZ tax breaks and incentives via a Public Private Partnership (PPP) with the DRC government.

Therefore, if Greenbushes is currently valued at ~US$7 billion (~US$5.3 billion valuation excluding the Hydroxide plant) taking into account both IGO and Albermarles's average SP appreciation of ~17% since IGO's purchase, then what should AVZ (on track to becoming the lowest cost SC6 producer and owning 75% of Manono) be valued at by the time Manono enters production in 2023 with a Sulfate plant in tow?

IMO, certainly a whole lot more than 75% of Manono's current ~US$600 million valuation - which btw is STILL less than 12% of Greenbushes 'mine only' valuation (i.e. excluding the additional US$1.7b in value that I've generously attributed to the Hydroxide plant) despite AVZ's recent SP appreciation - in line with the rest of the industry.

GLTA and bring on the Lithium Hydroxide study, remaining Lithium OTs and a long overdue but indeed  mouth watering Tin OT.

Cheers
Elpha