look - on the raw numbers, yes, its a great deal. but lots to consider.
Firstly, the costs. Halcyon is paying about $30m in total for this mine. Of this 800K is upfront and the rest is in shares and options, so not too bad actually.
The project
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Right now, nickel is already way off its highs at $12/lb.
But still a floor price of about $10/lb is reasonable.
So on the assumption that canegrass has 140000 tonnes of nickel metal, you get a total value of nickel product of 140000*10000/.454 = 3.08 bn.
It appears that Capex on this project will be minimal (the pit is open, they've done infill drilling I presume to demarcate the resource). They'll have to get the men and the equipment to run a dig and haul operation to the nearest existing HPAL producer [pretty sweet deal really]
Costs of Extraction. For Halcyon, impossible to say. I know that Minara's forward looking total cash cost of production (ground to saleable nickel) is US 534c/lb from my last broker report. minara used as its Australias top lateralite producer.
I think its reasonable that the provider of the ore (Halcyon ) would get a 10-20% cut for their part in the process. [unsure of this figure]
So you're looking at anywhere between 300-600million to Halcyon minus their cost of extraction.
Looks like a good deal - and its the most progress I've ever seen HCY make in my history trading this company.
HCY
halcyon group ltd
