Ann: TNG signs strategic HoA with BBI Group, page-219

Excuse the evening ramble from the UK. I find these things easier to get clear when discussed with others who are more familiar with mining economics.

The more I think about this, the more I see it as a no-brainer for both BBI and TNG, if they can come to an agreement on the $ side of things.

Extrapolating TNG's project numbers out to the BBVTI project:

BBI - JORC compliant Resource of 456 million tonnes graded at 0.64% V2O5, 13.7% TiO2 and 45% Fe. BBI is also intending to develop port infrastructure near to the BBVTI resource.

(The port has already been given the green light, with something like $6bn allocated to it).

"Mount Peake - JORC Measured, Indicated and Inferred Resource totalling 160Mt (118Mt Measured, 20Mt Indicated, 22Mt Inferred), grading 0.28% V2O5, 5.3% TiO2 and 23% Fe."

"TNG updated the economics of its Definitive Feasibility Study (DFS) for Mount Peake in November 2017, confirming a world-class project capable of generating outstanding returns. Key findings of the updated DFS included life-of-mine net cash flow of $11.7 billion, a pre-tax IRR of 44% and an NPV of $4.7 billion."

So BBI have close to 3 x the deposit, at over twice the grade, making it 6 times as much of the good stuff?

From various reports (https://www.asx.com.au/asxpdf/20171120/pdf/43pcrw8k59d9bm.pdf for example), the TiVAN plant will cost around $650m for stage 1, and roughly the same again, for stage 2, as throughput increases.

So using donkey maths, BBI's project NPV must come in around the $60bn-$70bn mark over the L.O.M. (?), and ASSuming a similar IRR as TNG (most likely will be a lot better), that gives them a NPV of around $26bn.

$ doesn't seem to be much of an issue to them, when solutions are at hand.

$650m for a refinery would be nothing to them. Particularly if SMS want to B.O.O.T. it up.

This seems like the perfect proving ground.

What commercial terms would make sense to TNG? With the size of BBI's resource, they wouldn't be sharing the facility, that's for sure.

So it would be on a JV basis / profit share?

Sure, I'd ideally like Mt. Peake to get going, but here we have the perfect opportunity to get things moving, fast.

I'd be a little concerned about BBI having full access to the IP, but that's going to be a concern with whoever takes the plunge with a TiVAN refinery.

This should have been seen as a huge positive. Or perhaps Mr Market sees it as disappointing, that Mt. Peake is most likely going to take even longer to get going, and may not happen at all?

I'm long on TNG. The SP is very frustrating, but it's currently where it is for a reason.

I'll make no disparaging comments on the performance of our management team. We are at the cusp of great things because of them (3 years later than we were promised ... opps, slipped out!).