Resource Update, page-35

Hi Speccy,

My point is even though protecting themselves may or may not have been part of the motivation of not doing the deal, the outcome was probably a good one for AML if they were supposed to be taking on all the risk that NCZ are.

Essentially you would want to lock in an agreement for toll treating the ore before doing the deal on the century assets. $20/mt ore would need to cover the costs of treating at the mill + selling costs + tailings storage/rehab. On top of that $20/mt ore would need to work for the miner and that would depend on their mining/transportation costs to the mill.
Could you/your group indicate which ‘mine ready’ companies could have been in a position to supply ore to toll treat at century? I’m not aware that there were/are any but given your length of time your group has invested here there may have been some?

Needs to also be said that after 10 years the full risk of rehab of century tailings + Walford Creek ore tailings + (any tolled ore tailings) treated at the mill would need to be set rehabilitated. Given the potential volumes the tailings management would be costly and involve expanding the tailings dam & the liability figure would be much higher. Quite a different concept to NCZ where they reprocess the tailings, reducing the volume of the tailings and fill the open pit.

On the Co recovery of 68% - yes the communication on that front I agree has been very slow and they need to provide a more detailed update on this. Based on the latest presentation they indicate a metallurgical flowsheet update will be released in Q1/Q2. Let’s see.

On the acid, yes there are a number of phosphate deposits in the region however only phosphate hill (IPL) is in production and has the infrastructure to produce phosphoric acid so the only realistic outlet on the fertiliser side. I believe there is one more Phos rock mine looking to develop its asset but the question would be who would pay for the infrastructure to convert the phosrock & sulfuric acid into phosphoric acid?
Could a self funded phosphoric acid plant be upside once they bed down the production - that could be a possibility. Also keep in mind that some mines also use sulfuric acid as reagents and leaching of copper oxide deposits and there are a number of mines/deposits in the region.
There is also a QLD based nickel cobalt laterite mine that will require a large quantity of sulphuric acid.

Sulphuric acid is very much a tradable commodity and Japanese smelters ship a large volume of their sulphuric acid by-product into the international market. As long as the acid exports are a backstop to domestic sales with a higher margin then that shouldn’t be a problem. Also imagine if the size of the project increases by 2x3 times - they will be producing 1-1.5Mt sulphuric acid which they would need to have an option to export.

The other point is large miners typically just want the simplest product to be produced. They are not in this for the sulfuric acid or phosphoric acid, they are in it for the copper/base metals & cobalt. Acid is a by-product for them. Also, depending on who Aeon are talking to re JV/development they may have a preference to produce sulfuric acid. We know for a fact they are talking to Mitsubishi and they trade sulphuric acid but worth noting that they also invest in copper:

http://www.mining.com/mitsubishi-ups-stake-anglos-quellaveco-copper-project-600-million-deal/

http://www.mitsubishicorprtm.com/japan/english/sales/base_metals_and_aluminium/base_metals.html

https://www.cumtn.com/operations/copper-mountain-mine/overview/