hi everyone, just thought i would put some stuff down here ive collated for the fundamentals case. most of this stuff is pretty obvious and a rehash of what is already known, but with all the madness around lately i think its helpful to have this info in one place in font of me. I also feel that peer review is an incredibly important tool in the search for knowledge, so please let me know what you think and where i'm off track or talking out of my a....
its pretty long winded i'm sorry, but i feel it's just as important to put my reasoning up for peer review as it is to put up the conclusions, so sorry for the length. I appreciate anyone who can be bothered to wade through it all, ive tried to bold the main summations for the skimmers.
Timelines.
Mine
As i only follow AJM and PLS as direct peers, ill use them as a comparison for mine construction, also conveniently they are both entering production this month.
PLS release their DFS in Sept 2016, and broke first ground on their mine site on Nov 24 2016. they initiated long lead purchasing in oct 2016.
so PLS has taken 23 months to get to production from DFS, 22 months from long lead purchasing, and 21 months from breaking first gound. i didnt dig right through every announcment, but im pretty sure they were saying they would be in production by Q2 this year, and obviously have had overruns, as can be expected on any project. they have been shipping DSO since about april, but im not sure we will count this, although kidman will probably be shipping something between mine completion and refinery completion.
AJM also released their DFS in Sept 2016, initiated long lead purchasing in Nov 2016, and broke ground in March 2017.
they have hauled their first shipment this month, so they are on a similar timetable to PLS, but have taken less time to construction, taking 17 months from breaking first ground but they are building a smaller facility. they are also late but a couple of months, but i think we can expect that with any project like this. anyone who has ever worked on major projects can understand this.
so in summary, we can probably expect a mine construction timetable of somewhere between 16months and 22months from first ground being broken on the site. and we can expect it to be late from whenever they say it will be starting. my guess is they are holding the DFS back to release with the refinery DFS, and then they will push the go button on both. that puts them due some time in Q4 i assume, considering they are also evaluating an expansion, im not expecting it any day soon. so lets say they can get the
mine construction started in Q1 2019, we might see first spod by end of Q2 2020, more likely Q3 2020.
Refinery
Refinery timeline is a bit vague obviously, but ill use Tianqi as an example as they are building next door. they initiated long lead purchasing and awarded first contracts in Nov 2016 for their stage 1 24000t facility. they have forecast it to take 2yrs to build and are planning to be online in Q4 this year. we will see how that pans out. the stage 2 expansion is scheduled to take around the same time to build.
considering Kidman and SQM are planning to build a bigger facility than their stage 1 project, i think we can reasonable expect it to take longer to build, especially if they go for the expanded case. we wont know ramp up times until we see how Tianqi go, but we can again assume everything will take longer than planned.
if again we assume they can get started in Q1 2019,
i think there is a chance of first hydroxide by Q3 2021 if we are lucky, and then pending ramp up times for the refinery, maybe full capacity by Q4 2021 or Q1 2022 more likely with general delays.
Capacities and Capex
48 000t refinery
to supply a 48ktpa refinery, KDR and SQM would have to build a concentrator with a capacity somewhere around the 1.5-2mtpa to produce the 300-320 000 t of 6% spod the refinery would need. depending on the recoveries etc. ill leave that as guess work until we see DFS's
CAPEX estimates for this are only guess work, but the KDR scoping study aimed for a 2mt facility to be built for $111mill.
AJM built a 1.5mt facility for $140mill according to their DFS (waiting to see the annual report to see how far out they were)
PLS build a 2mt facility for $214mill according to their DFS (waiting to see the annual report to see how far out they were)
the JV deal provides for $70mil, which would cover KDR's portion of 50% of a 1.5mt facility, but they will be short most likely if they go for 2mt.
Refinery Capex at 48 000t i can only guess from Tianqi, they are spending $700mil on their 48 000t facility, so ill use that as a baseline until we get a DFS.
so total CAPEX estimates for KDR share for a 2mt mine with a 48 000t refinery
214mill + 7000 mill = 914mill x 50%
= 465mill - 75mill from SQM
=
$395 mill voodoo capex for KDR 2mt facility and 48ktpa refinery
60 000t refinery
to supply a 60 000 t refinery, KDR will need to produce roughly 420ktpa of 6% spod. which, based on some guess work and conversion sums, should be covered by a 3mt facility, operating with 60% recoveries. so ill assume they will aim for a 3mt facility if they go for the 68ktpa refinery.
so these numbers are
REAL VOODOO, TOTALLY MADE UP GUESS WORK, but again something to talk about.
so assuming as a real vague
if we use a vague yardstick of $100mil gets you about 1mt of facility, ill ballpark a 3mt facility at $300mil
if we say the 48ktpa refinery is going to cost $700mil, then ill guess a 68ktpa facility will cost somewhere close to $1bill to build
so KDR’s capex burden will be
$300mil + $1bil = $1.3 bill x 50%
= $650 mill - $75mill from SQM
-
$575mill voodoo capex estimate for KDR 3mt facility 68ktpa refinery
Voodoo Revenue
im really not sure there is much value trying to speculate this hard on the revenue potential, let alone the profitability of the business at this stage, but I’m including the table i made just to give something for peer review. we can speculate about the valuation multiples and NPV’s, but I’m no where near confident with these calculations at this stage so ill leave them out. all i can see is a voodoo estimate of how much they might make for sales, and compare that to the current value of the SP to see if there is any over speculation creeping in.
ive assumed an opex of $7000/t for hydroxide, due to a conversation i had with
@Sharpey here 33755842
View attachment 1267823
and the slide used in the duetche bank presentation from may, indicating they see themselves getting somewhere around
there.
View attachment 1267826
so using that as a base, ive made a really simple table to give a voodoo estimate of how the revenue might play out over a couple of price points here.
View attachment 1267820
as im sure most of you will guess, these numbers are almost worthless until we see a DFS etc, but i find it at least a little helpful to have a vague idea how much money the project is likely to generate, when wondering where the SP is going, and what is a reasonable valuation for a project 3-4 years from full production
anywho, hope this is useful in at least generating a discussion that can help us all understand what we are investing in a bit better.
have a great day everyone and thanks as always for your help
