I have some done further analysis regarding this...

I have some done further analysis regarding this question:


Comparison of Mt Cattlin Pre-Feasibility Study with Greenbushes Mine
From the Prefeasibility Study we know:

- looking at 1 mtpa open pit mining and processing operation;
- producing 116,666 tpa Spodumene Concentrate;
- recovery of Spodumene = 70%;
- Spodumene Concentrate sells for US$400 to US$500 per tonne;
- producing 200,000 lbs of contained tantalum conentrate;
- recovery of Tantalit = 65%;
- Tantalum Concentrate sells for US$45 to US$50 per lb contained Ta2O5;

- Operating Costs are A$32.93 per tonne ore;
- Capital Costs are A$40 million;

Therefore A$ Revenue, Costs and Marginal Contribution per tonne:

Ore Processed (tonnes):
..........................1,000,000........1,000,000

Total Metal Extracted
Ta (lbs).....................200,000.........200,000
Spodueme (tonnes)............116,666.........116,666

Metal Prices - US$
Ta (US$/lb).......................45..............50
Spodueme (US$/ton)...............400.............500

Exchange Rate:.................0.88.............0.88

Metal Prices -
Ta (A$/lb)...................A$51.14...........56.82
Spodumene (A$/ton)............454.55..........568.18

Revenue - Tantalum (A$)...10,227,273......11,363,636
Revenue - Spodeume (A$)...53,030,000......66,287,500

Total Revenue (A$m).......63,257,273......77,651,136

Revenue/Ton(A$/ton)............63.26...........77.65

Costs/Ton(A$/ton)..............32.93...........32.93

Marginal Contribution per Tonne:
(A$/ton).......................30.33...........44.72



Greenbushes Mine:

Extract from Tailson's Website:
- Milled tonnage current processing capacity of 4 mtpa
- experiencing a fall in the ore's Tantalum grades;
- Spodmuene - 150,000 tpa capacity installed in 1996/97;
- operation comprises open-pit and underground mines;
- The primary tantalum plant, with the capacity to
process 3.5 Mt/y of ore, was placed on care and maintenance
- The 1 Mlb/y tantalum operation can be reactivated rapidly in response to changes in the economics of the tantalum market

Can try and work out its Revenue per tonne of ore using the above information:

Ore Processed (tonnes):........4,000,000.....4,000,000

Total Metal Extracted
Ta (lbs).......................1,000,000.....1,000,000
Spodueme (tonnes)................150,000.......150,000

Metal Prices - US$
Ta (US$/lb)...........................45............50
Spodueme (US$/ton)...................400...........500

Exchange Rate: 0.88 0.88

Metal Prices - A$..................51.14.........56.82
Ta (US$/lb).......................454.55........568.18
Spodueme (US$/ton)

Revenue - Tantalum (A$).......51,136,364....56,818,182
Revenue - Spodeume (A$).......68,181,818....85,227,273

Total Revenue (A$)...........119,318,182...142,045,455

Estimated Greensbushes Revenue per Tonne
(A$/ton)..........................29.83...........35.51


Comparison of Greenbushes to Mt Cattlin:
Est. Mt Cattlin Rev. per ton of ore:
(A$/ton)..........................63.26...........77.65

Est. Greensbushes Rev. per ton of ore
(A$/ton)..........................29.83...........35.51

Surplus (A$/ton)..................33.43...........42.14

Greenbushes/Mt Cattlin (%).........47.2%..........45.7%


What the above analysis indicates is that:
1. The value of greenbushes ore is substantially less than the ore located at Mt Cattlin;
2. Greenbushes would only be operating at breakeven if its ore was to be processed at Mt Cattlin with aoperating cost of A$32.93/ton;

3. We don't know what the operating costs of the Greenbushes plant are to know if it the mine and plant would be operating at a operating surplus if it was in operation today;

4. It is probably not surprising it is currently on a care and maintence basis;


Implications for Galaxy Resources:

Given that Mt Cattlin ore may be able to generate between A$33.43 and A$42.14 per tonne more revenue compared to the Greenbushes ore, there is the possibility that it may be more cost effective to send Mt Cattlin Ore to the Greenbushes plant for processing.
Consequently, the BFS needs to consider in its options analysis:
- the possibility of using Greenbushes plant (on a toll charge basis) for the life of the mine;
- the possibility of using Greenbushes plant (on a toll charge basis) for start up period at the start of the mine;
- Alternatively, the possibility of selling Mt Cattlin ore directly to Greenbushes;

Tailison might not want anything to do with Mt Cattlin. But they might.

Benefits to Galaxy might include:

1. Savings of A$34M in capital expenditure;
2. Quicker start up of mine;
3. Generation of cash flow from mining at start of mine which can then be used to fund construction of the plant thus avoiding some of the share dilution;

Regards

SP