JDZ101...just my opinion. The capex is higher than expected...

JDZ101...just my opinion. The capex is higher than expected mainly because of two reasons:

1. The original capex sent them on a delay to get a better bid, but the negotiations were not completed in time for their new deadline; so they bit the bullet and went with the original SNC-Lavallin in public.
However they made it clear that they are working on ways to reduce the capex.

2. They advised there was going to be a higher capex number, and they took a beating on it, but they refused to cut corners on the scandium circuit. This is very interesting because, while they kept the scandium capex in the estimate, they only allowed for scandium sales of 10 tpa in sales.

In my opinion this is very telling. My suspicion is that the scandium circuit may be financed as a separate sub-project. People like Airbus and Chinalco can participate on a project level, but isolate their involvement strictly on the scandium...they have no particular interest in cobalt or nickel.

I am not a spread-sheet jockey, and there are qualified construction types who might be able to put a price tag on the capex for the scandium circuit and refinery; but I imagine that the cost is significant in terms of the total capex bill. So I would not be surprised to see a couple of hundred million raised in exchange for scandium off-take and some equity.

Also...people see the $1.5 billion and want to puke over it....but this is not all new cash. People forget that there will already be a couple of hundred million in sunk owner's equity that is already spent on the project. Every dime they are spending and have spent on the project will count in the $1.5 billion.

We cannot know the amount but it is well over $200 million, probably closer to $300 million or more.

There is also about $100 million in contingency...of course the naysayers will howl that they will need all of that and more; maybe, maybe not.

But in total I think the numbers will work fine.

$200 million in sunk equity. Maybe more.
$300 million for JV project participation, likely in scandium
$500 million from the four banking syndicates, already lined up.
$xxx million for nickel and cobalt off-takes, they are 80% uncommitted.
$xxx million from RF & JZB, CITIC and friends. This is not a lot of money for them.
$100 million is contingency.

Look, RF raised $700 million and a 6% credit line for $100 million, for projects in DRC (the DRC !!) copper and zinc, and South African platinum. The projects are two to four years out.

He has put in $100 million in a VRB plant.

In my opinion he will not have a lot of trouble raising money for a nickel-cobalt project in Australia.