I covered this off in Post #:
49199843 and subsequently updated the figures in Post #:
49210076New AssumptionsActual figures from presentation show 2.735t produce 1kg of REO. (2.5mpta {feed}/914t {output}
JORC ppm is actually 840ppm not 900ppm.
Thus our previous "2" figure bolded above moves to 2.735T. Using basic math it means the 900g figure need to go up, or the 450g figure needs to come down.
Recall; the 900g comes from concentrate. i.e. i assumed 90% concentrate. this means 900g of REO in 1000g of liquor.
Recall; the 450g comes from your recovery of feed. i.e. i assumed 50% recovery of a 900g feed stock. meaning every 1kg of dirt i feed contains 900g of TREO and i recover 50% = 450g.
A few notes. I previously recall IXR suggesting 95% concentrate was achievable thus i'm assuming our 90% concentrate moves to 95%. i.e. 900g becomes 950g
To get that magic 2.735 figure using some basic algebra you'll wind up with recoveries needing to be 42.5% or thereabouts. Explained below with same format as the orginal.
New assumptions (data from company presentations)Feedstock is 840ppm TREO. Meaning 1T of dirt has 840g of TREO.
At 41% recovery every 1T of dirt i put only 344g of the 840g is recovered.
Now to produce 95% concentrate you need 950g of TREO in 1kg of liquor.
So 950g/344g =
2.76In summary I need 2.76T of dirt at 840ppm with 41% recovery to produce 1kg of TREO 95% concentrate.
So that's a rough guess. If the concentration is closer to 90% then the recoveries move up to around 45%.
Let's sense check. Note the figure of extraction using salt only on the left. Visually, this would appear to work to an average recovery of around 40%
additionally, when i was computing basket price using the actual recoveries from their MEZ sample i landed at 46% average. Recoveries are actual across each element.
Note the pricing is old so the figure would be higher now, secondly in 95% concentrate is produce figure is higher. On the other hand this is 1000ppm not 840ppm so that brings it down. I will revise the below shortly and set it back to the JORC. Only done the eastern zone as needed to educate a poster.
However point is i think when i run the 840ppm you'll find that 40-45% is almost spot on so i think my above workings is sound.
What i wanted to do or reflect was on the graph on right hand side and show how recoveries increasing materially impact revenues.
The salt only was averaging 40% recoveries wheras the salt and H2SO4 averages to my eye around 70-75%. lets re-run my latest inputs from company presentation with a 70% recovery rate.
New assumptions (data from company presentations) - with 70% recovery.Feedstock is 840ppm TREO. Meaning 1T of dirt has 840g of TREO.
At 470% recovery every 1T of dirt i put only 588g of the 840g is recovered.
Now to produce 95% concentrate you need 950g of TREO in 1kg of liquor.
So 950g/588g = 1
.61In summary I need 1.61T of dirt at 840ppm with 70% recovery to produce 1kg of TREO 95% concentrate.
What does this mean for economics?
Well the 2.5mtpa is your fixed throughput at the front end of your plant. Thus 2,500,000T/1.61 = 1552T.
This is how much you'd get out your back end with the 70% recovery of product instead of ~40%.
Using the same inputs for economics from Post #:
49199843 which delineated that revenue is around $30USD at current pricing (but increasing), and i assume opex to be around 10-12USD so we'll round to a profit of $20USD/kg. Meaning 31M USD p/a profit = 42M AUD profit P/A.
Note this is only their Y1 production profile which on only 80mT supports a 33Y minelife = 1.4bn profit over life of project.
If we move to the 10mtpa 6208tpa comes out the back end. which is 168M AUD profit P/A. (Noting if still basing off 80mt in product this is a 7-8Y minelife. Thus your profit over life of project remains the same. You just bank more in a shorter period.
2.5mtpa - (year 1 of production)
42M AUD P/E ratio of 10-20 is 420M to 840M in Y1 of production.Take 60% ownership and we're at 252M to 500M valuation in Y1.
upside between 7-14 times current market cap (at that point)10mtpa - (year 7 of production)
168M AUD P/E ratio of 10-20 is 1.6bn to 3.36bn in Y7 of production.Take 60% ownership and we're at 960M to 2bn valuation in Y7.
25-50 times current market cap (at that point)Further comments. PE ratio of 10-20 conservative given LYC valued in billions and making a loss. (yes i note there is value toward the capital sunk into the project as such but realistically, all mines need to make profit eventually, (unless vertically integrated into supply chain).
7Y mine life at 10mtpa based on 80mT JORC. expect this to move to 250mT or so with resource upgrade and another 125mt or so with the TN tenement. i.e. i think we'll see upwards of 500mT here but just target the highest grade and best HREO grades. regardless if we assume 360mt (conservative) it's just over 4 times larger than current. Meaning that 7Y mine life can move towards 30-35Y.
Meaning at 168M aud profit per annum across 30 odd years is north of 5Bn profit for life of project.
As previosuly indicated much water to go under the bridge, but shows insight to the project potential in my view. And as originally suggested only intended to show that improvements to recoveries materially impact your bottom line.
I explain this and give a rough estimate of value in relation to NPV in Post #:
48658073 (different stock) but principles are the same.
Also
"my general rule of thumb for (FAIR VALUE) S/P as a function of NPV is as follows.
1) SS/PFS performed, no offtakes, no finance = 10-20% of NPV
2) DFS/BFS pilot plant no offtakes no finance = 15-30% of NPV
3) Either of the above with offtakes secured = 25-40%
4) Any of the above with finance secured = 35-50%
5) in construction near term production = 50-75%"In short, in Y1 of production should be valued somewhere between 250-500m based on revenue and P/E this moves to 4 times that figure in Y7 of production.
if you take my above fair value in terms of development cycle IXR is in step 1. So 10-20% on the NPV.
Based on Y1 production thats 50M-100M
Based on Y7 production thats 200M-400M
Others have recently been comparing by resource size to biolantanidos. Without going over too much old ground i think i answer this question here. Post #:
48562067.
"
I explain my thought regarding NPV in Post #:47711645 specifically comparing to Biolantanidos in Post #:46047146 and then clarifying why i had applied higher opex cost in Post #:47922593.Whilst one might want to compare the resource size and then apply a linear relationship this isn't always a great way to work out fair value IMO. It's certainly a good first pass, but just because you have say 10 times as much contained resource doesn't mean you should be valued at 10 times the amount. Mining companies eventually get valued at their revenue or more specifically their profits IMO, so whilst it's fine to say IXR will have a resource 10-20 times the JORC of Biol applying a 10-20 time value figure solely on that is just lazy. If you actually look at expected revenue of product, throughput and make an estimate for operational cost you can actually construct a rough cut NPV which is what i have done in the past.
If people are interest in the new tenement i done some workings Post #:
48889487 .
Post #:
48094994 contains a bit of any overview too.
For new posters if you'd like to get some answer to some questions that are being asked recommend reading the posts i've cited and embedded posts therein. I don't have an issue repeating the info, but best to DYOR and also prevents the threads having to suffer from my regurgitative posts.
SF2TH
(20min delay)
