economics of lower grade ore

The Avebury resource has an average grade of 1.14% Ni and is 114000t with a 0.7% Ni cutoff. The economical cutoff was decided upon when the pon was much lower than the current $US40k/t. The economics of running lower grades of nickel ore through the mill has been looked at with two different nickel prices. Results are as follows:

Nickel Price $US20000
Nickel Grade (%) EPS After Tax & Interest ($A)
1.14 0.13
1.0 0.11
0.8 0.07
0.6 0.03
0.4 -0.01

Nickel Price $US40000
Nickel Grade (%) EPS After Tax & Interest ($A)
1.14 0.34
1.0 0.29
0.8 0.22
0.6 0.14
0.4 0.07

The following inputs were used:
Ore Throughput 900kt/a (capacity of mill)
Average Ni of Ore 1.14% (Avebury avg)
Average Ni Recovery 84% (Hellyer trial)
Production Cost $A63 /t ore processed (presentation 31/5/06)
Concentrate Price 80% of Ni price
AUD = 0.80$US
Tax 10% (Minimal tax due depreciation etc)
Tas Govt Royalty 5%
Bank Loans $A40m ( Capital equipment & contingencies)
Shares on issue 695m

Clearly at the current price of nickel grades as low as 0.4% or maybe even slightly lower could be economically processed. This would have the effect of increasing size the Avebury resorce (lower cutoff grades) and improve the economics of mining Melba, Bison & Saxon.