at the moment the cost production at Avebury is about US$11/lb
quite high but remember it is in start up phase in the quarterly ozl says "total cash cost may be expected to decline when this operation reaches full capacity"
I would suggest that the cost will drop considerably
I was just listening to this presentation on Avebury at the the Diggers and dealers
on this presentation they say some interesting things about the deposits
the motto at aligiance the prior owners was "nothing but nickel" Apparently the avebury rock has some of the highest concentrations of nickel in the world the mines "20%-plus nickel concentrates define a new global benchmark"
the actual cost of production are tipped to be about US$2.20/lb about 50% less than nickel produced in Kambalda in wa
if this is the case this mine would be one of the lowest cost producers in the world
so if they can bring costs down this project is likely to be very profitable
lets do a rough back of the envelop calculation resources = 172,000 tonnes reserves = 56,100 tonnes /123,644,400 lbs discounted 20% 103,037,000 lbs
4000 tonnes per quarter 16,000 tonnes per year 35,264,000 lbs per year
ni price = $4.50 cost production $2.50 profit $2
Profit $70,528,000
profits from sepon are likely to offset loses from century
Now just add in another $70m I'd say Prom Hill is likely to produce a profit as well
we could well be in the black by the end of the year
a lot depends on whether other cash burning activities are put on the backburner like exploration and development at Dugald River and Martabe
OZL Price at posting:
$9.70 Sentiment: None Disclosure: Held
