December 2019 PFSTo be fair to LTR holders the best place to start is there December 2019 PFS - they used a US$696 DMT price and had a post tax IRR of about 25% (obviously will be lowere at US$600 per tonne for example). Obviously having a high strip ratio in the 2mtpa basis of the PFS is a concern, and that impacts reliability of estimates given the PLS outcomes - ultimately it does boil down to how reliable the METs are cost wise, because what you can't scope in your own mind is the assays (and you need full assays here) to then see how reasonable the cost estimates are in the DFS - throw enough money at METs and they will achieve targets. It is actually the reason I have posted here around full assays.
Here is the comments I made in the PFS - Post #:
41741139.
"
The PLS experience provides that risk in that the cost estimate and its approach to METs hasn't transpired to the underlying recovery rate and costs estimates in a running plant (i.e. the process flowsheet where a large portion of the recovery rate of say 80% is done by floatation). PLS's problems are not price based IMO, because when compared to their DFS it was based on a US$550 per tonne spodumene price - the PLS problems are cost based, led mainly IMO by lower than expected recovery rates (hence the retrofitting of capital solutions to fix the problems) fundamentally diverging from the DFS targets. (Ditto - AJM has similar issues around divergence of recovery rates from DFS numbers and that explains its problems as well, despite it been better able to control costs compared to PLS, IMO)."
As I said above, deleterious elements are not just about Fe. You may want to revisit my own posts, attached herein into this paragraph, around the types of deleterious elements, gangue, variability of ore etc and given the ore in the open pit sections is unlikely to be homogenous (given the width of each vien in the octopus tentacles and potential differences in cooling) and therefore the METs testing ore at different layers are critical IMO to ensure the process flowsheet works as planned and can achieve the stated DFS cost projections. Certainly in the underground sections, given width and compactness likely to be homogenous down there IMO but that is a guess. Where I suspect PLS has had issues is the viens in the open cut section differ (i.e. are not homogeneous and inbetween each vein to the next is strip ratio, with each vien possibly been slightly different etc etc. And yes I am guessing. If the METs are not properly done to reflect the entire deposit and the costs are not appropriately modelled and/or the process flowsheet does not have slight flexibility to deal with each vien then problems can arise around cost and recovery - i.e. METs need to reflect assay reality as throw enough money at METs will get what you want. The deep sections here are less problematic IMO. Again these posts explain the concept around mica, deleterious elements etc etc - Post #:
43201243 and Post #:
43295331My personal view is management know what they are doing here soshould be ok, but lack the full assays as they relate to METs and costs will continue to drive speculation here IMO
5mtpa to replace 5mtpa IMOIMO they will be doing a DFS on a 'ramp up' 5mtpa configuration IMO and you should get economies of scale.
If they stay at 2mtpa, you need to be mindful how discounting works. At 2mtpa the underground section won't get hit for 10 years - 12 years IMO, unless you find more near surface ore, and the problem there becomes how heavily discounted those revenue streams become in a NPV/IRR context, hence the benefit of a 5mtpa facility if the economics stacks up.
The likely block caving method, to contain costs, in the underground section will probably test the maximum they can actually pull out of the ground, but when you get to the deep pegmatite the strip ratio will be greatly reduced from the open cut section anyway.
An unknown remains how much flotation product is expected to be produced - the PFS was based on DMS/floattion product but that has become less clear given some recent comments from LTR. Floatation has greater running costs than DMS by the way, and the capex savings are not as significant as some think of going for floatation only as against DMS/floatation so not sure why that comment to start with - I stated as such in Post #:
43315454
Open cut and underground sectionI posted this the other day in this post - Post #:
43243913"It is obvious too me that LTR have some viable resources to 200 metres to 250 metres, but the predominant resources are below 200 metres and viability overall is dependent how you get to those resources in a mining plan in a NPV/IRR sense and at what scale - this was a post I did a while ago on the 74.9 MRE in your July 2019 Ann, but all your more recent hits are much further down so the predominant measured and indicated resource that goes into a DFS from the recent drills will be predominantly below 200 metres to 250 metres (Post #: 41723618).
How LTR transitions (speed and rate of change hence how they do that in the DFS will be interesting) from the open cut section where the strip ratio is about 7/8:1 (which means high costs and impact on NPV/IRR and note strip ratio is different to waste ratio because waste ratio is when your actually in the pegmatite themselves as against dealing with the overburden which is strip ratio) to the underground sections, i.e. which means costs around the open cut level at that intersection point of transition to underground mining, Post #: 43055062, but IMO so that NPV/IRR is not too much adversely afffected by a reasonable price assumption is the key here in project evaluations.
Some of the comments in twitter land IMO appear misinformed too me to say the least on the depth issue for LTR, but with a little bit of knowledge posters can become dangerous when they want to misinform IMO If I were a holder here,I would be able to debate with them, but I'll let yourselves work it out, but I have given you the hints in this paragraph how to do so. Hint - It is about conversion rates on an installed capacity basis and likely revenue derived on an installed capacity basis (as a management plan on how the underground cost structures can be controlled on a unit production cost basis compared to the open cut section).
On the mica/METs issues, LTR releasing full assays when releasing the MRE, i.e. that is stating Mica but more importantly the deleterious elements in the mica and Fe203) would put that issue to bed pretty quickly IMO, because the 'fear factor' been played on is throw enough money at the METs you will get to the required concentrate grade but is the cost estimate correct. I think this is really where @tendoji is coming in from. AVZ does not have that problem in the sense it has provided the full assays and you can work backwards to see the reasonableness of the cost estimates - low mica (as it relates to the deleterious elements in particular) and Fe203 suggests the costs at minesite are not going to be significant, especially with its low strip ratio (transport is a post minesite cost and that is where the key viability issue rests with AVZ btw). In other words its assays are reported in line with JORC no amiguity (so you can say yes the METs look about right and at the cost assumed)
Too me it is all about NPV/IRR on the quickness of transition from the open cut to underground mining sections and the process flow sheet, and how much of it is reliant on floatation product, for LTR. That is the unknown for me here. Seriously we know both resources have issues, LTR depth and AVZ transport, but ultimately good resources will get developed. That is depth poses a challenge for LTR hence the mining structuring will aim to reduce those risks on how the open pit is developed and then transitioned to underground, and for AVZ transport is a risk. Sovereign risk is one element of risk - there is also production, deleterious elements, opex and time delay risks - and the more strip ratio and waste you have to deal with then the graeter the risk of cost overruns and your plants not operating or achieving recovery rates in the right amount of time, manageable risks if you get things right at the start (Post #: 43031668"Answer - well I am surprised holders here haven't had a guess at what I was thinking in the underline above. I thought many of the rampers here would know their investment and how it translates to costs.
Well here is your answer when debating costs: In answer, just remember that at 1.3% Li20 content you need 6 tonnes of of ore at a 77% recovery rate to produce 1 tonne of 6% grade spodumene. From a 5 mtpa ore feed facility that gives you 830,000 tonnes of 6% grade spodumene produced. If you do the maths for 3% grade spodumene, you get to 2.6 tonnes of ore needed to produce 6% grade spodumene, meaning you produce 1,900,000 tonnes of 6% grade spodumene from the 5 mtpa facility (a lot more revenue potential than in the open pit sections). And the mining plan within an NPV/IRR sense is the key - it requires getting to the underground section as soon as viably possible, assuming the ore demonstrates low deleterious elements hence predominant opex costs are on strip and waste ratios only. Per unit costs in the underground section are going to be ok, assuming METs as they translate to cost are ok, because of the higher grades translating into higher per unit revenue. Depending on the interaction between the two higher grades in the underground sections actually might have a lower unit cost than the open cut sections at the point of change between the open cut and underground section (i.e costs with open cuts increase and at the interaction point to swith to underground the costs increase less so in underground mining with depth compared to open cut but here have higher grade in underground section to open cut which is interesting - refer this post to kikker Post #: 43055062 to understand what i mean), because of the higher grade and the fact you need far less ore there in those sections to produce 1 tonne of 6% grade spodumene than in the open cut sections.Hence the importance of the 5mtpa facility - economies of scale
All this though dependent on the METs been a reasonable representative of the costs for removing deleterious elements, which becomes far more important if you are going to rely moreso on floatation to produce spodumen concentrate.
DMS product would show the METs are fine (as they translate to cost) because with DMS product you can only produce it if i.) the spodumene is easily liberated from the ore, and ii.) the grains are coarse and iii.) the spodumene has low deleterious elements because you can't remove deleterious elements like Fe, flourine, phosphorous and others in a the DMS process if it is in the spodumene itself and ore themica cannot be easily liberated from the spodumene. If you fail any of the 3 points, well it is to floatation, hence why I have said in the past I am very comfortable with AVZ's costs at minesite because of the amount of DMS product it will produce at minesite (transport is a post mine site cost and for those who argue transport is a risk be mindful as posted last night by me Ivanhoe is likely/is using the same root as AVZ - google who Ivanhoe is btw - Post #:
43333374)
Tantulum creditsSome people over blow tantulum credits by a long shot, here and in other stocks. They would not be high and you need to do your own maths - and for consistency I have said that even in the AVZ thread where credits there are tin/tantulum, and posted that view here to - Post #:
40024479. Don't get bamboozled by misconceptions on how much credits can reduce costs - they will not be that large, and AVZ has a decent grade of tin/tantulum as well so that is been consistent in view. The maths how to do credits is in the embedded post herein, and you can apply it to LTR for those mathematically inclined (obviously you need the METs first).
ConclusionWait for the DFS here - full assays would help btw to settle the impurities issue as they may translate to cost as I posted in Post #:
43295331 - but the higher grade in the underground sections may offset some of the assumed potential cost increases of underground mining.
Time will tell and all IMO
And finally for kikker, AVZ's transport solution around rail is what Ivanhoe is proposing as a route - here is that post too. Take it up with Ivanhoe as well if you think transport solutions are not becoming evident in the DRC. Post #:
43333084But these comments are around LTR.
And yes I write too much but so be it. Tear it down if you like.
As I keep saying, post objectively as many new greenfields projects are required to meet the estimated 2000 GWh demand by 2030.
VB time top up.
All IMO IMO IMO
(20min delay)