Originally posted by Kalenn
Oz,
You need to do deeper research if you are seriously interested in this project.
You are showing your bias and ignoring the data in my responses to you.
CBIX, includes historical data for real freight rates....includes real data for bauxite prices in China including moisture etc etc. (I'd recommend spending some time examining the site, buy a subscription, before you dis it).
eg from the site "Each CBIX value is a 30 day rolling, value in use, trade weighted, average price of a representative sample of bauxite imports into China over the period"
Rail, Canyon will be a client of the rail operator and will not have to 'capitalise' anything. There will be a freight contract/fee per tonne, simple and no upfront costs involved.
Bel air data supports my argument, it doesn't detract from it (and fully aware of their costs etc).
A quote from your reference:
"Bel Air Project Highlights:
- A technically robust open-pit project that offers low capital and operating costs, rapid payback and strong financial performance at current bauxite prices;
- Twin development strategy allows fast track to 4.8 Mtpa production for immediate cashflow generation;
- 12 month initial construction phase; first production targeted for January 2016;
- Ramp up phase to 10.3 Mtpa maximises throughput and reduces operating costs without disruption to production; and
- Includes development of dedicated export loading jetty infrastructure for transhipment of Direct Shipping Ore ("DSO") to Capesize or Panamax vessels.
Bel Air Economic Highlights:
- Post-tax internal rate of return ("IRR") of 72%;
- Post-tax net present value ("NPV") of US$766 million (at a 12% discount rate);
- Initial construction capital requirement, including financing costs, of US$110 million;
- Peak fundraising requirement of US$120 million with post-commercial production capex largely funded by internal cashflows;
- LOM cash operating costs of US$22/tonne free on board ("FOB"); and
- Breakeven price, including working capital, in-country taxes and royalties of US$25/tonne FOB."
and a reason why with the above operating costs and
the need to trans-ship to a cape sized vessel 32 kilometres off shore/end of loading ramp, power onshore by diesel, triple handling and still achieve those economies arguers very well for an operation that direct loads at port. ie Canyon.
also from your link
"Onshore infrastructure includes:
- A self-contained camp and operations centre
- Water wellfields which have been identified and designed
- Power obtained by diesel generators
- Dedicated communications and internet
Transhipment is the optimal method for bulk export from Bel Air
- Transshipment involves the loading of bauxite into barges at a barge berth at the end of a causeway
- The causeway is a simple geotechnical structure placed on bedrock (1.4km long, -3.4m CD) which provides access from the shore to appropriate water depth for a barge load-out berth
- Self propelled barges then transport the ore to an Ocean Going Vessel at the Transshipment Zone, approx. 32km offshore
- A Transhipment vessel then transfers the bauxite from the barges to the OGV
- This provides an optimum balance between low capex, simplicity of operation and functionality"
Happy to stick with Canyon's likely infrastructure solution and lower reactive silica. clear.png
Hey Kalenn,
I did a bit more research...
I had another look at your spreadsheet and your post of 27/12.
I may be wrong but aren't you using FOB cost and CFR value? Where is the sea freight cost of US$16.60 you mentioned in the post?
Another thing I'm not sure of...
When calculating the value of bauxite on the CBIX site, shouldn't the input be available alumina rather than total alumina and reactive silica rather than total silica?
In the mineral resource estimate by SRK there are two data sets defined by the lab in which they were analysed. For each data set equations are developed for the estimation of available alumina and reactive silica. The three high grade plateaux, Raymonde, Agnes and Beatrice all went through Genalysis. The equations for Genalysis are:
available alumina = total alumina x 1.07 - 8.2.
reactive silica = total silica x 0.75 - 0.01.
Let's say that the high grade resource is 50% total alumina and 2% total silica.
A total alumina grade of 50% gives an available alumina grade of 45.3%.
A total silica grade of 2% gives a reactive silica grade of 1.49%.
Feeding available alumina and reactive silica into the CBIX calculator gives a CFR ore value of about US$64 per tonne rather than US$69 per tonne for total alumina and silica.
Going back to the spreadsheet, if you add in the freight cost and reduce the ore value you end up with...
Reduction in pre-tax margin = $16.60 x 1.05 (moisture) + $5 = US$22 per tonne.
(20min delay)
