G'day all !
Just my 2 c on SC grades.
Producing a lower SC grade is cheaper for us to produce and harder for the converter to maje the chemicals.
We mine the same waste and ore quantities; we process the ore by grinding it and send it to the concentration circuit. That's a cost that is there independently of the SC grade (aka the Li units )we produce.
Then we concentrate it with media flotation, magnetic sepparation, press it out to remove watter excess, etc. During the concentration process, we remove most of the waste, but some lithium goes away with the waste...
The more we concentrate the spodumene, the more waste we remove and the more Li is lost with the waste into the tailings; this is the recovery rate (desing was 72%) Hence producing less Li units, and more expensive, as the cost that is spreaded across the Li units is roughly the same.
Below my calcs, based on the last 4 quarterly reports.
From the market perspective, which is short of Li , the main aim is to get Li units out of the ground, hence the rational of requesting to lower the SC grade to maximize the above.
From mine perspective, there is a sweet point that maximize profit, when the combination of higher Li units sold by reducing SC grade (dmt p.a.), lower Li production cost, higher shipoing costs and lower price received delivers the biggest margin. Where is this sweet point ? Only PLS knows.
The information we have is very rough :
SC1.2 500USD
SC 5.3 5,000USD
Higher than 5 it seems it's adjusted pro-rata to Lithia content...
So I think producing in the 5%sh is the best for the mine and the market.
Having said that, I think it's obvious that we are far from operating at 70% recovery ratio , we are at 67% for SC5.3... so for SC6 it would be much lower.
I could be the addition of ex-Altura's product, commissioning, ore body changes, etc
I don't like this, but the high market price is covering this issue, let's keep an eye on its progress as there is substantial improvement there to make.
Please feel free, as always to add, or constructively destroy my points...
Have a nice day.
(20min delay)