There's at least four or five significant upcoming events (Feasibility, off-take, residual funding, permitting progress and a possible strategic investment by Ghana's MIIF). Any robust push of information to brokers is IMO better done when most if not all these unresolved items are sorted because the risk profile of the project being promoted has improved. If Atlantic were to do a major push before then, brokers are first communicating a story with many unknowns and this may not be their best bet at securing new investors. If the brokers are competent (yea I know many aren't), they will already be following the projects with 2025 production potential.
A significant increase in planned output will occur in the Feasibility study but how much is unclear. To estimate requires clarifying the current modelling and sorry this next has quite a bit of maths/logistics - sorry in advance. In finalising calculations I'm pleasantly surprised that some 400kt+ permutations exist.
The existing pre-feasibility study was 225.2Mt of ore dug with 200.3Mt of waste. 25.0Mt of ore was crushed and 25.0Mt of processed. Across a 12.5yr life this was a 2.0Mt/yr capacity. At that time Atlantic had 20.5Mt Indicated, 9.6Mt Inferred (30.1Mt total). A critical item to note is that 25.0Mt>20.5Mt so Atlantic are prepared to shift some but obviously not all inferred resources into their planned output modelling. Also, the fines from crushing flowed through and were part of the 25.0Mt concentration or "processed" volume. Over the life of mine there were 3,740kt of fines which is 15% of 25.0Mt. The life-of-mine formula was basically 2,000kt * (1.22%/6.00%) * 62.5% = 254kt. Either rounding or some 5.5% product from Fresh P2 material would account for this 254kt vs 255kt difference.
So what is the situation now?
Atlantic has 35.3Mt with 3.5Mt Measured, 24.5Mt Indicated and 7.4Mt Inferred. The previous 2.0Mt/yr capacity will probably increase. An increase to 2.5Mt is +25%. An increase to 3.0Mt is +50%. A factor impacting Atlantic's decision will be their confidence of finding additional resources. If this confidence is high (which I think it is), they might go big and go for 3.0Mt. There may also be a fines processing recovery benefit. Atlantic are also planning multiple smaller DMS units that each target a different size of ore. The beneficial impact on recoveries hasn't been clarified but there must be a benefit otherwise why shift from one bigger bit of equipment to three smaller bits of equipment?
The scoping study effectively had 15% of the 25Mt processed being fines for zero percent recoveries. The underlying modelling was therefore 74% recoveries from 85% of the resource and 0% recoveries from the other 15%. This screams out back-end flotation particularly as there is also the issue P2 material (natural fines) have low recoveries via DMS. Higher recoveries are likely from flotation. The publicity difficulty is this shifts from a clean DMS only build. One configuration Atlantic are almost certainly considering is substantial DMS capacity plus a small back-end flotation circuit that is built from operational cash flow after the DMS is commissioned and operating.
If the 15% fines can't be reduced, the 31.3Mt of P1 would generate 26.6Mt crushed ore and 4.7Mt Fines ore. P2 of 4.0Mt is also effectively all fines. Atlantic therefore probably want 3 units of DMS capacity for every unit of Flotation capacity (26.6:8.7) or flotation being 25% of the overall total. If Atlantic had a 2.0Mt DMS capacity (with no fines in this capacity) and 0.67Mt Flotation capacity and both systems achieved a 74% recovery and still targeted SC6, the new output would be 411ktpa. If all the measured and indicated resource were included and 55% of the inferred resource, there would be 32Mt of ore to process. This would allow a 12yr life of mine at this new, higher volume of output. There was an oddity in the last modelling that the head grade was 1.22% while the JORC was 1.26% indicating a higher average grade in the non-mined material than the mined material. Even if this oddity persists and takes 3% off volumes, it would still be 399ktpa and some minor tweak somewhere would make it 400ktpa.
There may be recovery benefits from dropping below SC6 so a wild-card possibility is that the new capacity is nearer 450-460kt but for a 5.6% grade [2,670 * (1.25%/5.60%) * 77% = 459kt. Because this and the earlier figure is above 392kt SC6 equivalent, these plans would meet 100% of Piedmont's Tennessee requirements. Piedmont would be able to either continue on-selling all its 113kt off-take or not need to worry as SYA ore is potentially diverted to an NAL located concentration facility to Hydroxide or Carbonate later this decade.
If the new plan is a 2Mt DMS plant and a cash flow funded flotation build, capital costs may not differ materially from the original 2Mt DMS plant capex despite output shifting from 255kt to circa 400kt. Clearly Atlantic would lose the fines revenue from the scoping study but would more than make up for it with higher Spod volumes. If anything close to this is being planned, its going to be a lot easier to explain to brokers when the Feasibility study comes out.
Also if the new capacity is circa 400Mt then PLL/Atlantic's 90% share of profits is effectively from 360kt of sales (10% being Ghana's free-carry interest). Atlantic's half of this is 180kt of spod sales. With Atlantic having a lower cost base than Core who are also expected to be around this volume, valuations approaching that of Core may become sensible. I wouldn't expect the same valuation even if Atlantic's profits exceeded those of Core due to perceived country risks and Core will soon either report increased capacity or increased life of mine. I guess it doesn't need to be pointed out that Core has a $1.9b market cap while Atlantic is $0.375b. Even if Atlantic settled at 60% of Core, that's still 200% upside before any further gains if Core increases.
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