Review of ASX typical laterite and sulphide cobalt player's SS and PFS, page-145

"I still can't entirely get my head around the size of their capex jump from previous studies. Some of it, yeah, but not almost doubling."...

Hi Hac30,
I am long ARL and CLQ. I'm not apologizing for the CLQ capex, but there are a couple of logical reasons.

First, they are packing in a lot of capacity over and above the stated DFS production...in other words they are taking it on themselves to build a bigger project, without the paper benefit of all the projected income.
The scandium circuit is the best example, a lot of capex is going towards 160 tpa capacity but they are only giving themselves DFS income of 10 tpa.

Second, they have a high-end firm doing the estimate. It is not an area I am familiar with, but listening to those who are knowledgeable SNC-Lavallin is good quality but expensive. This is pretty surely the case because when CLQ got the figures, their eyes got watered also and they delayed the DFS by three months to work on it. I believe the push back in commencement and FID is because the negotiations have not been concluded; they have gone public in this month's DFS that an alternate EPC option is still being pursued, so they have admitted as much.

Third, I suspect that they have borne additional expenses to make sure problems with the new process
are taken care of in advance. They have high-level operators on payroll now who have a lot of experience in big laterite...Tim Kindred was at Ambatavoy, and it is likely they are listening to him and doing things that cost money, to avoid problems later.

Fourth, since all these figures are projections, one has to allow for the possibility that the competing or comp capex numbers for other projects are understated. This seems to be the norm for most miners.
Under-forecasting capex in large nickel projects is pretty common. So, sure competitors A and B may have lower project capex estimates, but we do not know how far over their final figures will be when the project is completed.

On this issue, I recall DD on a nickel project that was 1.7 billion on the original cost estimates and came in at 8.0 billion when the dust settled. I know this is a different scale of project than we are talking about with ARL. But I guarantee you, that in five years the capex for ARL will be a lot higher for the project than it is on the current PFS. They will probably increase production volume, the same way CLQ did.

As far as AUZ is concerned, BB said that AUZ doesn't need to worry about capex, because SKI is footing the bill for the plant.