Hello PICT, what you've highlighted is one of the points, I...

Hello PICT,

what you've highlighted is one of the points, I believe, is being heavily underestimated by those betting on the BFS disappointing to the downside.

The old BFS(U) with an NPV8 (post tax) of $980mil worked off a long term ilmenite of $200 when the prevailing price was circa $250. As pointed out by Bruce G (who doesn't seem one to be unrealistic or overstated) ilmenite is currently trading at circa $400. On this basis it mightn't be reasonable to assume an upgrade in the long-term illmenite price in the upcoming DFS of let's say $275 - $320. At $300 that's a 50% increase in the life of mine revenue from ilmenite (ilmenite represebts 35% of total revenue). If ilmenite represented 35% of revenue in the BFSU then a 50% increase in that revenue stream would result in a 17.5% increase in total project revenue, which could easily be a 30-40% increase in free cashflow - which could mean a 30-40% increase in NPV just from the increase in the ilmenite price (that's $980mil increasing to $1.3 - $1.4 BIL) .

additional to the above, let's assume:

1) improvement in recoveries

2) increase in the long term Zircon price relative to the old BFSU (lower percentage increase than ilmenite but same principle)

3) reduction in capex due to outsourcing the power plant

4) lower contingency requirements due to arranging debt financing after equity gap is filled

5) a decrease in capex due to the new plant design (MSP out, LTR in)

6) inflation factor of 10 - 20% on overall capex

7) lower financing costs due to increased NAIF participation and more competitive bank debt financing.

All in all, needless to say, I think we could be significantly surprised on the upside when we start factoring life of mine revenue stream increases in the order speculated (remember, TB has a 35 year mine life in an industry predicted to experience a supply deficit).

Will the mineral sands sector one of these day be the new lithium?

thanks for pointing this out @PICT