Thanks for replying back and giving questions because that's how we validate the numbers presented to us.
All of the numbers on the CAPEX and OPEX are presented in US$ as they are usually expressed in US$ as the standard currency in reporting Bankable Feasibility Studies.
The CAPEX/OPEX numbers were compared as close as possible based on Pre-release of DFS, or near that date. These numbers were pulled out from ASX database from both FMG and SDL.
The US$CAPEX/ton/year number gives you an indication only on how your Capital on Investment relates to the unit of production you produce (in this case ton of mined-ore). This then gives you an idea on how much you have to put in to produce the same ton of mined ore. This is a quick "gauge" for the whole project - not a theory.
What it means, at this point, simply is that, it costs more to build the same (or identical mine as FMG Operations) - if you build that in Cameroon/Congo region. It is obvious, because there's not much existing infrastructure to be used there yet. So everything will cost more to transport things to site, and to send Expats there to work - would have to be paid higher as well, (and I am guessing, you would have to bribe a lot more, as compared with building the same in WA), etc. etc.
Or to put it simply, if we use a KIA Truck from Korea to do all the job, then the landed cost on site at FMG operation in WA would cost US$32,440 as compared to a landed cost of the same truck to do the same job onsite at SDL Cameroon-Congo which would cost US$96,000. This is just because it costs more to get the same Truck into SDL site due to the remoteness of the area.
To get the Payback Period would include a lot more numbers and variables into the equation (for example the interest of the CAPEX $$$ used, the Operating Profit, the EBIT/EBITDA, and all the other Accounting tricks they use.
The NPV and IRR numbers would tell us more clearly the story, however, I haven't seen any NPV data for SDL yet. For FMG, I'm sure there was NPV and IRR, but I could not see them on those documents I was using as references, so I put "not indicated" in the Table.
On the Market Cap, please "take note only of the Pre-DFS Comparison" because the Current Market Cap numbers (as of 8 February 2011) are not comparable yet, until SDL is in full production mode.
Any expansion done with FMG after the DFS would have incurred additional CAPEX, and same would be true to SDL if the expansion is done after the DFS. Should they include some expansion capability of the SDL now before DFS, then surely, the numbers they already have on CAPEX will significantly change as well. We will see what they will do between now and the day when DFS comes out, and how it will evolve after DFS.
Hope this helps. Thanks.
Cheers.
SDL Price at posting:
50.5¢ Sentiment: Hold Disclosure: Held
