Hi there,
Thanks for the tag, sometimes good to ask and have things responded in public which others might want a view on.
I can't recall exactly the post in question but irrespectively happy to give it a fresh run with the variables requested.
So on a few variables;
1) Pricing in the SS. This was a LoM projection for it's pricing which varied over time. Note the below is the calculated concentrate basket for IXR's product. That being a 92% MREC and it's assumed pay-ability.
View attachment 3759485Excluding scandium the average price used in the study was $73usd/kg. Which is basically derived from the base case above, multiplied by the tonnages. Because IXR produced higher rates in the later years 2030-2035 (assumed 11Y LoM) this is how the average revenue works out to that figure.
Irrespectively, what i have found from most developers and feasibility studies is that most use 100% purity baskets. They don't factor either the concentration (IXR at 90%) hard rock at 35-40% for MREC and or they just use 100% purity assumptions. Essentially like a head grade basket. (Which is wrong).
Okay so what does this all mean. Base case is reduced by 75% for payability and then revenues calculated by the ramped tonnage model.
Spot price today i have calculated at $65usd/kg. So it's fairly in line with what is being assumed in years 2024-2028 but obviously much lower than the $118 from 2030 onwards.
2) Now on opex. Unfortunately there wasn't/isn't a breakdown of opex across the years. I.e. we can't tell if the mine becomes cheaper to run at the throughput increases (economies of scale) or if it stays the same. Basically, similar to how the pricing changes, we might have opex changes.
3) The throughput changes overtime. So I guess the SS, if you assumed current spot price and no increase or change in that price. accounted for pay-ability, made no change in the opex in latter years the inputs look something like the below.
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 | Column 7 |
|---|
| 1 | | Basket | Opex (Sc credit | Throughput | Profit | Capex | NPV Inputs |
|---|
| 2 | Y0 | | | | | 89000000 | |
|---|
| 3 | Y1 | $ 49.00 | $ 23.70 | 750000 | $ 18,975,000.00 | | $ 18,975,000.00 |
|---|
| 4 | Y2 | $ 49.00 | $ 23.70 | 1000000 | $ 25,300,000.00 | $ 40,000,000.00 | -$ 14,700,000.00 |
|---|
| 5 | Y3 | $ 49.00 | $ 23.70 | 2000000 | $ 50,600,000.00 | | $ 50,600,000.00 |
|---|
| 6 | Y4 | $ 49.00 | $ 23.70 | 2000000 | $ 50,600,000.00 | $ 70,000,000.00 | -$ 19,400,000.00 |
|---|
| 7 | Y5 | $ 49.00 | $ 23.70 | 2500000 | $ 63,250,000.00 | | $ 63,250,000.00 |
|---|
| 8 | Y6 | $ 49.00 | $ 23.70 | 2500000 | $ 63,250,000.00 | $ 47,000,000.00 | $ 16,250,000.00 |
|---|
| 9 | Y7 | $ 49.00 | $ 23.70 | 3800000 | $ 96,140,000.00 | | $ 96,140,000.00 |
|---|
| 10 | Y8 | $ 49.00 | $ 23.70 | 3800000 | $ 96,140,000.00 | | $ 96,140,000.00 |
|---|
| 11 | Y9 | $ 49.00 | $ 23.70 | 3800000 | $ 96,140,000.00 | $ 47,000,000.00 | $ 49,140,000.00 |
|---|
| 12 | Y10 | $ 49.00 | $ 23.70 | 3800000 | $ 96,140,000.00 | | $ 96,140,000.00 |
|---|
| 13 | Y11 | $ 49.00 | $ 23.70 | 3800000 | $ 96,140,000.00 | | $ 96,140,000.00 |
|---|
If you input these you land at an NPV of ~ 215M USD.
If we amend my calculated spot basket and input the Argus projected basket price for IXR's product.
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 | Column 7 | Column 8 |
|---|
| 1 | | Basket | | Opex (Sc credit | Throughput | Profit | Capex | NPV Inputs |
|---|
| 2 | Y0 | | | | | | 89000000 | |
|---|
| 3 | Y1 | $ 60.00 | $ 45.00 | $ 23.70 | 750000 | $ 15,975,000.00 | | $ 15,975,000.00 |
|---|
| 4 | Y2 | $ 68.00 | $ 51.00 | $ 23.70 | 1000000 | $ 27,300,000.00 | $ 40,000,000.00 | -$ 12,700,000.00 |
|---|
| 5 | Y3 | $ 56.00 | $ 42.00 | $ 23.70 | 2000000 | $ 36,600,000.00 | | $ 36,600,000.00 |
|---|
| 6 | Y4 | $ 58.00 | $ 43.50 | $ 23.70 | 2000000 | $ 39,600,000.00 | $ 70,000,000.00 | -$ 30,400,000.00 |
|---|
| 7 | Y5 | $ 69.00 | $ 51.75 | $ 23.70 | 2500000 | $ 70,125,000.00 | | $ 70,125,000.00 |
|---|
| 8 | Y6 | $ 82.00 | $ 61.50 | $ 23.70 | 2500000 | $ 94,500,000.00 | $ 47,000,000.00 | $ 47,500,000.00 |
|---|
| 9 | Y7 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 10 | Y8 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 11 | Y9 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | $ 47,000,000.00 | $ 199,240,000.00 |
|---|
| 12 | Y10 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 13 | Y11 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
Note the second column is the argus basket price reduced for payability.
You land at 600M USD pre-tax. Noting the sum of the above EBITDA (sum right column) is 1.3Bn USD and the SS was 1.28Bn. So the calculation are IMHO pretty replicable of the SS. Once you accommodate for the tax you land at the SS post -tax NPV which was 320M USD.
Note that some of the earlier years are actually lower in revenue which lowers the NPV.
Okay so here's the rub in what i was suggesting when the SS was released that using the full resource the extension to the LoM makes a bit of a difference.
We'll use spot pricing and assume it for LoM. It's the same as table 1 but now there's 95M USD profit for the next 14years.
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 | Column 7 | Column 8 |
|---|
| 1 | | Basket | | Opex (Sc credit | Throughput | Profit | Capex | NPV Inputs |
|---|
| 2 | Y0 | | | | | | 89000000 | |
|---|
| 3 | Y1 | $ 65.00 | $ 48.75 | $ 23.70 | 750000 | $ 18,787,500.00 | | $ 18,787,500.00 |
|---|
| 4 | Y2 | $ 65.00 | $ 48.75 | $ 23.70 | 1000000 | $ 25,050,000.00 | $ 40,000,000.00 | -$ 14,950,000.00 |
|---|
| 5 | Y3 | $ 65.00 | $ 48.75 | $ 23.70 | 2000000 | $ 50,100,000.00 | | $ 50,100,000.00 |
|---|
| 6 | Y4 | $ 65.00 | $ 48.75 | $ 23.70 | 2000000 | $ 50,100,000.00 | $ 70,000,000.00 | -$ 19,900,000.00 |
|---|
| 7 | Y5 | $ 65.00 | $ 48.75 | $ 23.70 | 2500000 | $ 62,625,000.00 | | $ 62,625,000.00 |
|---|
| 8 | Y6 | $ 65.00 | $ 48.75 | $ 23.70 | 2500000 | $ 62,625,000.00 | $ 47,000,000.00 | $ 15,625,000.00 |
|---|
| 9 | Y7 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 10 | Y8 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 11 | Y9 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | $ 47,000,000.00 | $ 48,190,000.00 |
|---|
| 12 | Y10 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 13 | Y11 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 14 | Y12 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 15 | Y13 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 16 | Y14 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 17 | Y15 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 18 | Y16 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 19 | Y17 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 20 | Y18 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 21 | Y19 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 22 | Y20 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 23 | Y21 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 24 | Y22 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 25 | Y23 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 26 | Y24 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
| 27 | Y25 | $ 65.00 | $ 48.75 | $ 23.70 | 3800000 | $ 95,190,000.00 | | $ 95,190,000.00 |
|---|
Pre-tax NPV is 554M USD. Post tax is just shy of 300M USD. close again the the actual SS figures. This is just coincidence, but basically says the NPV of makuutu would be the same as the SS if spot pricing never rose and IXR ran for 25Y. It's still 95M USD profit per annum in latter years just low revenue in the start.
Then if we use the Argus pricing.
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 | Column 7 | Column 8 |
|---|
| 1 | | Basket | | Opex (Sc credit | Throughput | Profit | Capex | NPV Inputs |
|---|
| 2 | Y0 | | | | | | 89000000 | |
|---|
| 3 | Y1 | $ 60.00 | $ 45.00 | $ 23.70 | 750000 | $ 15,975,000.00 | | $ 15,975,000.00 |
|---|
| 4 | Y2 | $ 68.00 | $ 51.00 | $ 23.70 | 1000000 | $ 27,300,000.00 | $ 40,000,000.00 | -$ 12,700,000.00 |
|---|
| 5 | Y3 | $ 56.00 | $ 42.00 | $ 23.70 | 2000000 | $ 36,600,000.00 | | $ 36,600,000.00 |
|---|
| 6 | Y4 | $ 58.00 | $ 43.50 | $ 23.70 | 2000000 | $ 39,600,000.00 | $ 70,000,000.00 | -$ 30,400,000.00 |
|---|
| 7 | Y5 | $ 69.00 | $ 51.75 | $ 23.70 | 2500000 | $ 70,125,000.00 | | $ 70,125,000.00 |
|---|
| 8 | Y6 | $ 82.00 | $ 61.50 | $ 23.70 | 2500000 | $ 94,500,000.00 | $ 47,000,000.00 | $ 47,500,000.00 |
|---|
| 9 | Y7 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 10 | Y8 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 11 | Y9 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | $ 47,000,000.00 | $ 199,240,000.00 |
|---|
| 12 | Y10 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 13 | Y11 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 14 | Y12 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 15 | Y13 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 16 | Y14 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 17 | Y15 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 18 | Y16 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 19 | Y17 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 20 | Y18 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 21 | Y19 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 22 | Y20 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 23 | Y21 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 24 | Y22 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 25 | Y23 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 26 | Y24 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
| 27 | Y25 | $ 118.00 | $ 88.50 | $ 23.70 | 3800000 | $ 246,240,000.00 | | $ 246,240,000.00 |
|---|
Pre-tax NPV is 1.4bn one you factor in a 30% Tax you arrive at just shy of 1Bn USD post tax NPV. That's argus pricing and just extended LoM for 25Y which would be roughly the full tonnage. I've indicated previously that IMO if they get 200-250mT will be maybe 22Y LoM so take that to consideration. Thats closer to ballpark my guess on the BFS.
The upside too all these figures is stand-alone sep facility and refinery. On Argus pricing you essentially use the second column 118 not 88 as you now get full revenue aka 100% payability. You of course would need to add capex (maybe 100-150M USD is what was quoted and can be funded through profits) and increase opex to run, but i'd assume an overall net profit increase each year and an NPV even higher.
On the spot pricing you would use $65usd not $49 for the same reason.
A few other studies i've seen assume full tonnage from Y0. often not an accurate input.
If you re-run REO dfs or fs and use spot pricing, and probably calculated revenues for basket based on concentrate and pay-ability you will get mostly vastly different figures.
I'm bullish on the HREO price rising, as well as, Makuutu LoM being extended. The low NPV figures are representative by lower revenues in early years and a LoM fairly conservative given the resource estimates.
Not sure if that answers your question but should assist others so as to understand how the revenues are impacted by spot price, argus price, throughput and LoM.
Lots of variable in these things and the above is just what i've put together for others to use. To do properly takes teams weeks and so treat this as a guide only and or reflection of my opinion as to what could lie in store. The outcome is what the team and vendor compiling the study input as well as what the asx allow.
SF2TH
(20min delay)