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Agree with WelshF, it would be a nonsense for it to be AUD.
Their tier definitions are here, page 60: https://www.newcrest.com/sites/default/files/2019-10/Briefing_Book_Oct_2019_0.pdf.
Doesn't actually say if it is AUD or USD.
I've always assumes Us$ as this is the same for gold pricing. Whatever you use it should be in the same currency or it would be nonsense.
When NCM talk about AISC is it in AUS $ or US $ ? Quite a difference.
@Goldenl, I should have said I have no hard facts on that. But I do know that every plant / factory will have both fixed and variable costs. For instance, if there's a lease on the land, that's fixed -- really doesn't matter how much ore you process, you pay the same lease. Lighting and security are likely fixed. Some maintenance will be fixed and other variable. And so on.
I don't know anything at all about this to know what things could be fixed and what could be variable at the Telfer processing. I'm assuming Citi knew what they were talking about when they said it would turn Telfer into a Tier 2. If that's the case, then the fixed costs must be quite substantial.
Of course, we don't know (though obviously both NCM and GGP will know) what it is going to cost to get the ore out of the ground and over to Telfer. That's variable. I'm still assuming it is going to be less than the Telfer ore due to the much higher grade.
The other thing is that NCM uses AISC < $800 for Tier 1, and there's been a LOT of chatter about this being Tier 1. If so, that tells us something about their anticipated AISC.
This is my own relatively uninformed thought process. Others more knowledgeable than me may shoot it down. That's why I've put so much detail, so if I'm doing something stupid someone can set me straight.
TMT
I stand corrected regarding trackers - maybe none directly into the AIM 100.
Thanks for the info on AISC - interesting thoughts regarding fixed v floating costs.
Two factors will reduce the AISC significantly. The first, as already noted, is that we expect significantly higher grade ore from Hav than from Telfer. So variable costs will be significantly lower.
The second is the fixed costs. Simple explanation: There are some costs that increase as you process more ore, there are others that are just there and will be there, whether you process lots of ore or not very much.
The fixed costs aren't going to increase when you start processing Hav ore. They are going to stay the same -- but now, they will be partly attributed to Hav and partly to Telfer.
I don't know how much is fixed and how much is variable. But I do know that Citi said this was going to change Telfer into a Tier 2. It currently falls short of Tier 2 because the AISC is over $900. So that means they expect the fixed costs attributable to Hav are going to reduce the Telfer AISC by over $300, to below $900. So that suggests the fixed costs are pretty significant.
It also suggests that AISC for Hav is likely to be even lower, because of the higher grade of ore. That will be partly offset by the cost of moving the ore to Telfer but I really doubt that's going to be too substantive.
I expect the AISC for Hav to be below $800 and maybe substantively lower. It was this calculation that finally convinced me to buy here, not just as a flyer, but because I think this greatly derisks the investment and puts it within my investment profile, despite being on AIM.
If POG stays over $1500 and AISC is <$800, then this is a slam dunk, and I think POG is likely to go higher, not lower.
They do, I believe it comes in as a credit to the AISC. So, again here, any difference in copper content that which was used for the AISC number you first thought off will make a change.
Very true welsh my limited understanding of the technicals aside but do they not calculate the worth of the copper content when putting together the overall cost and offset it against it? Sorry if that’s an obvious question and again thanks for the reply
This is where the MRE (Maiden resource estimate) is the key piece to tell us how much is there and at what grades. Then we need the Feasability Study to flesh out the costs and timescales etc of getting it out of the ground. With these in place we will have a better understanding of the expected AISC and future profitability (or not).
I'm not a fan of the fag packet calculations as we simply don't have anywhere near enough information to come up with anything meaningful. Not only that, they virtually all, ignore the copper content which is substantial!
Thanks Welsh minds working overtime this morning obviously I’m no expert but thanks for the reply appreciate it so assuming the better grade of ore and additional costs etc if the overall AISC was reduced to say $500-800/Oz it would significantly increase the value of our 30% of the resource GLA
The AISC will change. Its quite simple, really, but if the AISC is $1253 while they produce from ore at, say, 1g/t, then the Hav grades (at 10 times better we are told) will reduce the AISC to $125.3.
That assumes everything else remains the same. The 10 times could only be the better grades with the Breccia grades somewhat less. Also there is additional cost in moving the ore from HAV, along with mining costs at Hav. Basiclly better grade = lower AISC, but there may be additional cost in getting the better grade.
Hey Guy Been a while since I checked in trying to catch up lots of garbage to be expected lots of really cracking info discussions I was just having a browse online and seen that Newcrests Telfer mine as of FY2019 was operating on an AISC/Oz of $1253 as planned they will use Telfer for Hav will this AISC remain the same be higher or lower as per the far better grade of material that will be coming from Hav? I also did a little calculation of profit/Oz if it was the same and for every 5moz using $1700 gold price all assuming that the AISC for Telfer would remain what it states on the Web for FY2019
5moz = $2.235 billon Our 30%= $670 million
10moz = $4.47 billion Our 30%= $1.341 billon
15moz = $6.7 billion Our 30%= $2 billion
20moz = $8.9 billion Our 30%= $ 2.67 billion
25moz = $11.1 billion Our 30%=$3.33 billion