Just some key notes for you to consider:
-After 1.5-2m the weathering decreases and the grade of bauxite also decreases while the reactive silica increases within this deposit. If you read the announcements from 2014 when they released the inferred resource, you will see this trend very clearly... as below - 011 goes from 24Al and 5.9 RxSi at surface to 22.4 and 7.3 at 1-1.5m depth. 012 goes 17.5 and 10.8 to 15.7 and 13.5 etc etc
Further to this, only 28 of 52 holes found bauxite, in a zone that was previous marked as 10Mt inferred resource. That's a conversion rate of just over 50% of the drills and under 20% of the volumes originally inferred.
View attachment 520692
-the grades I gave were the best section they could find and they went from a 30Mt inferred resource to only being able to prove 1.9Mt of indicated resource. This was IMO cherry picked for grade but doesn't even give them 1 year of production at their proposed rates. Shown below (link to announcement at bottom also)
View attachment 520695
which gives them a resource that looks like this - notice they still call some holes 'exploration target' even though it's clear to see the RxSi is higher in those areas and they've been drilled several times. In fact the most interesting thing about the following image is the assumptions they have used around the low RxSi holes (blue area) to make the indicated resource as big as possible, often going right up to a higher RxSi hole (red area) and using it as a gradient peg, which may or may not be the case.
View attachment 520698
-If you feel that grade doesn't matter, I think you need to look at the end user on 2 accounts. 50 vs 30% alumina means they for every 4 tonnes of 50% they get 2 tonnes of alumina and then ~1 tonne of aluminium. At 30% they need over 6tonnes to get the same result. So if bauxite spot price (which is based on higher grade) is around $50/tonne (which is pretty high for bauxite historically), at the grade defined you'd only get $33/tonne.
Further to the point above, every % of reactive silica increases the amount of caustic used for digestion and also impacts the amount of HCL you need for cleaning. The caustic is a major cost because the entire stream is heated to 200-250 degrees and pressurised to 4000-5000kPa so the alumina can be digested. This is a lot of energy when you are doing 50% more tonnages to get the same product and using more reagents to do so.
If you combine these factors, you'd likely be unable to sell this stuff above half of the spot bauxite price.
-Part of the issues I raised on earlier threads with their proposed scoping study and licensing will be that they have chosen to truck haul ore 15-25km through a town to port. If you calculate this based on a 60t (biggest road train you can get in QLD I believe, 3 trailers) that 120000 becomes around 2000 trucks. If you wanted to do 5Mt you would need 83000 trucks per year, or around 228 per day (30-50km round trip, assume 1 hour per trip, thats 10 road trains going through you're town, every hour, around the clock).
Review their scoping study assumptions and you'll see the margins aren't there to really make this a feasible project currently.
http://www.asx.com.au/asxpdf/20141229/pdf/42vrwl7fb881b7.pdf
If you look, the operating cost quoted recently ($20.87) do not include shipping or royalties, the real cost per tonne is $37.41 (20.87 + 5.30 royalty + 11.24 shipping) and that's optimistic because they are assuming contract mining and transport, which means all vehicle and man-hire will have margin+ contigency built in.
The south johnstone project just doesn't add up compared to other bauxite projects in Australia (NT/North QLD) which have better grades and easier shipping routes and also in SE Asia and indonesia where the grades are better, labour is cheaper and they are also closer to the end user.
My 'negativity' as some call it isn't baseless, I have studied this and many other projects on the ASX in-depth. This stuff interests me and it's what I do for a living. I'm a rock-nerd.
