full cash cost=C1+freight+royalty+admin+fincial cost(interest,repay)+others
i will explain some information which i researched for Karara Project.
1.Freight cost
freight cost in depond on the BDI inedex.
from the recent BDI index,the freight cost about USD$6-7/ton.Due to high BDI index at December Quarter,the freight cost about USD7-8
2.Royalty
Western Australia has a three-tiered royalty system. The royalty rate depends on the level of processing and the form in which a mineral is first sold – 7.5 per cent for ore, 5 per cent for concentrate and 2.5 per cent for final form. All iron ore companies pay royalties at 7.5 per cent. However, if the iron ore is concentrated, the rate is 5 per cent. Based on recent prices of A$60 per tonne, iron ore royalty payments equate to $4.50 a tonne or $3 a tonne for concentrate.
For Karara Project,the royalty per ton =(Sale price-freight cost)*5%
at December Quarter,royalty about USD$3.7/tone
3.Admin cost
I have checked the totao admin cost in 2015,cost about RMB 20500000(about USD$3million)
If Karara Project can produce 10m tones per year.the average admin cost per ton about $0.3-0.4
4.financial cost
there are so many longterm loan and short term loan
long term loan:USD$1.48B,from Mat 2015-May 2030. interset rate depond on the 6 months LIBOR+rate,and every year KML should repay USD$10m
short term loan:
1.USD$400M. 3year working capital loans from 08/14-08/17.interest rate depond on the 6 months LIBOR+rate
2.USD$300M.3year working capital loans from 05/14-05/17.interest rate depond on the 3 months LIBOR+rate
3.USD$300M.3 years fixed rate loan from 04/15-04/18,interest rate 4.1334%
4.there are also some performance guarantee for Brookfield Rail USD$300m and USD$90M for WesternPower.
Total interest per year about USD$100M
If Karara Project can produce 10m tones per year.the interest cost about $10/ton
So full cash cost=$52+$8(freight)+$3.7(royalty)+$0.3(admin)+$10(interest)+$1(repay)+other cost(I dont know)
At least $75 per ton
the C1 cash cost reduced $8per tone compare with last quarter due to new methodology calculations and production volume.good news is looks like the more produced the less cost.If the March Quarter can produce 2.5M tones maybe we can lookforward C1 cash cost reduce to $50.
The very high cost let Karara Projec dont have competitivence.
As a Chinese watch the china's ecominc more than 5 years.I dont think the Iron ore price(62% Fe) can reach at USD$100 or more. Rio,BHP,FMG,Vale and Royal Hill all of them are increasing their production at 2017.The higher iron ore price means more production.And China's steel demand will soft in the couple of years.
All my hope is Iron ore price(62% Fe) can stable at the next 3 months.GBG can still suvial and have a chance can reach at 100m market value.Some people think GBG can reach 10cents or more,In my opinion,this is just a dream.
the share price can reach 5cents or more will let me very very happy and enough for me
