SK Innovation, page-448

Lets wait and see what the Sconi Optimised BFS shows a BFS,friend have confirmation via email yesterday and we have Flippa’s meeting withTim Maclean and Sophia earlier in the week that they are all working hard onall the key Sconi deliverables i.e

-       Revised Mine Plan

-       Optimised BFS

-       Long Form SKI agreement.

-       Funding (inc hopefullyNAIF)

Plus we now know SKI have had some major orgnisational changesin breaking out the battery and other related operations into a separate companywhich may well explain why the investment in AUZ and long form agreements etchave been delayed

Sconi is 3 deposits (Greenvale where plant will be Nickel rich, Lucknow 10 Kmaway Cobalt and Scandium rich and Kokomo 60km away.

With the revised drill results they do not need Kokomo depositfor a 18-20 year mine life.

 

No need to use of Kokomo and with significantly better cobaltgrades now found at Lucknow they can cherry pick the right areas to mine to reduceproject payback – hence working on the Revised Mine Plan from which willflow the Optimised BFS which should show quite a bit lower CAPEX and OPEX.

Plus don’t forget the CAPEX currently has 15% contingence

As mention I expect the LOM to remain the same 18 years evenwithout Kokomo Payback to improve from 5.2 years to 3 to 3.5 years and Post TaxIRR improving from 15% to 20-25%. If so this makes funding much more palatablehowever lets wait and see

 

IMHO Funding will come 

 

-  60% from the banks with 1st charge over the assets andcashflow

- around 20% from 

- perhaps 10% from SKI maybe direct investment

- 10 to 30 % forward sale of nickel and cobalt (loan provided bySKI or Banks perhaps Korean banks) - this is why perhaps Ben let slip lastsummer that SKI will fund the project. Note page 14 and 15 of the Original BFSissued 20 Nov 2018

 

Remember management are major shareholders and are thereforehighly vested in minimizing dilution.

 

As regards valuation that is up to the market to decide it iswhat it is value is in the eye of the beholder, however I imagine 95% of thecurrent valuation of AUZ is based on Sconi with maybe 5% Flemington (its only1% drilled) and negligible or any value associated with Thackaringa.

While AUZ under the Optimised BFS do not envisage mining the Kokomo depositwhich is 60km from the proposed Sconi Greenvale plant, it maybe that when AUZstart exploration drilling of the surrounding tenements (they have acquired thetenements surrounding Sconi which are 10 times the size/area of Sconi.
If they find more Nickel/Cobalt in the surrounding 10X tenements it could bethat AUZ does another 2^nd Plant in Queensland before consideringFlemington.

If they find more Nickel, Cobalt and Scandium surrounding Sconi in Queenslandthey may well look to sell Flemington another party  (i.e CLQ or similar) and Thackaringa potentially to COB as COB has only sufficient ore for a 7 or 8 year LOM.

 

However for now all focus must be on Sconi – the world is goingelectric and everyone is looking for battery minerals for delivery 2-5 yearshence GLTA