As a market analyst you’re second to none (irony).I guess that...

As a market analyst you’re second to none (irony).

I guess that you’re referring to the article in AFR, not in the West. The article is based in a report by Citigroup.

If MinRes can survive because of its iron mines, why are they going to put the Yilgarn iron hub into C&M (1,000 employees impacted)? And why they plan to increase lithium production from 380 kt SC6 equivalent (FY2024) to 480-545 kt SC6 (FY2025 guidance)? And why they continue to expand Mt Marion underground? And why the EBITDA in FY2024 has been nearly the same for Iron Ore and for Lithium (394 M AUD Iron, 384 M AUD Lithium)?

The naïve journalist states that: “Citi examined the seven Australian mines using analysis popularised by gold miners to arrive at a breakeven figure known as an all-in sustaining cost including freight and royalties.” And she continues with “With expansion capex factored in, Liontown’s Kathleen Valley is the least profitable of all, only breaking even when the spot price exceeds $US1500 a tonne.Excluding that growth capital, the mine is profitable at around $US900 a tonne.”

But the World Gold Council on its guidance note explicitly says that “Non-sustaining costs are primarily those costs incurred at ‘new operations’ and costs related to‘major projects at existing operations’ where these projects will materially benefit the operation. A material benefit to an existing operation is considered to be at least a 10% increase in annual or life of mine production,net present value, or reserves compared to the remaining life of mine of the operation.”

Clearly, the expansion capex at Kathleen Valley, planned to increase annual production 33,33% (from 3 Mt to 4 Mt of processed ore) is NON-SUSTAINING. Therefore, the AISC for Kathleen Valley is not $US1,500 but $US900 after factoring out the expansion capital they have calculated.

If we are to believe that Citi and AFR have done right their work with the numbers for the other mines, then LTR stands as the second lowest producer after Greenbushes. If those numbers are also wrong, then their report is rubbish (no data to be trusted).