Hi @billyen. Yes there will be some good profit even from this first sale - even though its more correct to see this as a bit of a "free kick". GMM gets up-front payment and the customers get a cheap order.
A friendly gesture on both sides to seal the deal.
Remember this $36m is split with GXY so its $18m USD.
$9m up-front and the balance when it hits the dock.
Same goes for the next one at double the size, but with a price that should be quite a bit higher. Bank on 20%+ increase - and most probably $750 USD/t for the next 120kt shipment.
This first shipment will be cheaper to produce. There is 400kt of mined and blasted material for them to feed in and they don't even need to use the coarse circuit yet to start stock-piling. The cost benefit is probably handy as there would be a few bolts need replacing around the place etc.
Its probably too confusing in the end to see this as a per shipment deal. Once its off and running then the 100% off-take is easier to make calculations on how much spodumene is produced/year and what the running costs are.
As to how profitable the operation is I've read recently that Anthony Tse has quote $260/t for production - which makes sense and most probably also includes shipping. http://www.scmp.com/business/compan...resources-reopens-lithium-mine-chinese-market
Old figures were $47/t but were based on life of mine and may have included tantalum or something else that brought the costs down.
At $260AUD/t production cost the profit for a ton of spodumene at $600USD/t ends up being about $540 AUD/t.
At $750USD/t for a ton of spodumene - Mt Cattlin would be generating profit of $760 AUD/t.
Mt Cattlin was closed down at 137kt/year so its a very gentle mine ramp-up for them to be quoting 80kt for the start-up phase. It should be easy to achieve the old target very quickly (as Tse has said) and the plans for 150kt expansion were already in place when the mine closed. Expect these to be achieved by early next year.
200kt is the next target capacity that should be arrived at by 2018.
For 2017 at $760AUD/t and sharing 150kt with GXY - GMM could be generating $57m
For 2018 at $760AUD/t and sharing 200kt profits with GXY - GMM could be generating $76m AUD/year.
This could go even higher based on cost pressures of lithium.
I'd predict that the James Bay project will be built at the new 350kt capacity that is proving popular.
This could cost in the region of $180m (based on PLS PFS). Once a DFS is produced next quarter I'm hoping they move straight onto the build. There should be plenty of money to cover their 50% of the build with GXY and Anthony Tse has even suggested that he may be willing to sell out a little more equity. GMM would have the cash to do this too. By the end of 2018 they could have as much as $130m in profits in the bank for asset expansion (not counting what they earn this year from the first 2 shipments).
From 2019 - it starts getting hard to project spodumene prices etc and what percentage and size James Bay is operating at - but at the very least it would be double the profitability and at best ( perhaps with 70% of at 350kt plant at James Bay) well over triple. (70% of James Bay could be contributing another $186m/year from $760AUD/t spodumene). Would make for $250m/year operation ( and all calculations done after assumed production costs of $260/t).
And don't even ask what a 20-30% equity buy-in on SDV would generate in profits!
