Forward projections...
I've been tinkering with my latest financial model, and examined further potential scenarios with various updates for costs and pricing.
We all know that much of our resource is open at depth, and we are currently drilling to estimate what the current tenements may indeed hold.
The "exploration target" iirc is about 2-3 times our current amount.
For reference, our "current" estimation is that the resource will support a 10ktpa operation for 16.5 years, or a 15ktpa operation for 11 years.
Our initial plant is 2ktpa, and we are aiming to add a 10ktpa expansion to this, for a total of 12ktpa.
For simplicity, I've taken this as 12ktpa for 14 years, when considering what an increased resource might offer.
Longer mine life and/or higher production rates have been suggested by the company on several occasions, depending on the results of the resource expansion drilling and assessment.
Outcomes presented here involve a couple of
potential scenarios, based on a resource that is circa doubled from the "current" size:
Production case 1: 12ktpa for 28 years (increased from the current circa 12ktpa for 14 years target)
Production case 2: 22ktpa for 15 years (same total production of circa double current resource)
The modelling outcomes presented here ignore the current 2ktpa stage.
Key inputs:
- Capex = US$200M + US$35M contingency for the 12ktpa operation
- Capex = US$400M + US$70M for 22ktpa
- Opex = US$6000/t in yr 1, increasing by 2% p.a.
- Admin, Sustaining Capital, Royalty and Tax rates as per PEA, with admin and sust. cap increasing at 2% p.a.
- Discount rate = 8%
Three pricing scenarios are included here:
Pricing Scenario 1: $40k/t yrs 1-2, $30k/t yrs 3-6, $20k/t remainder
Pricing Scenario 2: $50k/t Yrs 1-2, $40k/t yrs 3-6, $25k/t remainder
Pricing scenario 3: $50k/t Yrs 1-3, $40k/t yrs 4-8, $30k/t remainder
Key outcomes summarised in the following chart are:
- Pre-tax NPV in US$Billions (orange)
- Post-tax AGY (90%) share, not discounted, in US$Billions over the LOM (Blue)
Key takeaways imo:
- A resource expansion of circa 2x has potential to provide a project NPV (pre-tax) of between around US$2B and $5B
- Increasing the production rate circa 2x, as opposed to increasing LOM circa 2x, has a significant impact on NPV (around 50% increase)
- These scenarios would provide AGY with profit (not discounted) of between around US$3B and US$5B; the best case being the 22ktpa @ 15yrs at the highest sales pricing scenario (C).
- That sort of cash flow will enable significant growth and expansion for AGY over time; at Rincon, nearby, or elsewhere, imo.
Sure, there are some simplifications and assumptions in this analysis, and the model is relatively simplistic, however, imo it helps to understand the
rough scale of the potential here.
Those who are interested in trying to find the puzzle pieces and assemble the puzzle, feel free to ask questions or present other inputs to assess; others who want to insult etc and clutter the thread with irrelevant BS
need not apply.
Not advice
DYOR
DYOMaths
GLTAGenuineLTH
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