Delta is planning to ship DSO from Mt Ida. Below is an attempt...

Delta is planning to ship DSO from Mt Ida. Below is an attempt to look at what DSO margins might look like until we get some updates from Delta on what this opportunity might look like. Thank you to @mcexplorer posted on the CXO thread a set of prices including DSO grade Spod below as that helped complete the loop around current prices.


Other than exploration and resource definition, the first step for DSO is getting the ore out of the ground. Two Australian scoping studies have recently made estimates of the cost of getting ore out of the ground. If Delta's unstated strip ratio is similar to either of these, they provide a good guess as to the cost. GL1 notes A$67.47/t ROM. GL1's Mining plan involved 18.91Mt of Mill feed with 438Mt mined indicating a strip ratio of 22:1 and an underlying mining rate of A$3/t. Delta could have a fairly high strip ratio and still come in at this cost. Essential metals have also put out a scoping study. Their cost per ton of ore processed was A$67.26/t. This indicates that Delta should be somewhere around this cost to get the ore out of the ground. I'll assume A$80/t and perhaps it may be less. As shown in the ESS table below, the cost of each ton of ore was $67.26 but because essential needed 7 ton's of DSO for each ton of Spod concentrate the typically quoted mining cost per ton of Spod is a lot higher.


Crushing - I'm not sure quite what this will be but Delta will have contract rates and an accurate estimates for this piece of the puzzle. A dot com website I found noted $10/t of operational costs so A$20/t shouldn't be too far from the mark.

Transport costs to port - The route below on Google is 987km. A more direct route is 692km but it may not be suitable for road train's or be suitable in all conditions. Google notes the cost as 9c per ton km. That would put the trucking cost at circa A$90/t. The Nov2021 version of LTR's scoping work used US$55/t to Geraldton (A$78/t at 0.70 exchange rate). On the route Delta have marked on their maps, Mt Ida is slightly further from port than Liontown so this indicates A$90/t may be pretty close as an estimate. On a good day it might be nearer A$75-80/t.



This indicates the ore to port cost could be as low as A$190/t before royalties and any other costs of operation. If the sale price is A$500/t then a 5% royalty would add $25/t and there would also be shipping costs from Australia to China. I'm therefore wondering if A$250/t a ball-park realistic delivered cost for Mt Ida DSO to China.

The screenshot above had 1.2-1.5% Spod at US$394/t (A$563/t @ 0.70). Mt Ida is likely to be on-average at the bottom of this range so perhaps taking 90% of it is a good estimate. That would put DSO revenues at about A$506/t. This indicates that at current Spod/DSO pricing Delta could be making circa 50% gross margins. Each 1Mt of DSO shipped could be a gross profit around A$250m. If 1 or 2Mt of DSO were shipped, that would fully fund a concentrator plant at Mt Ida and the operation of a Mt Ida concentrator plant could obviously fund the development of Yinnetharra.