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Toungesten. No I followed the assumption that Wasp made to keep it simple. It also made the figures look more favourable in WRES's benefit. So Tin is up around 38% on the value used in the FID ($18k vs $25k) but production is missing the FID level by 60%, The net effect is not worth consideration for a fag packet calculation.
Wasp.
The cost per mtu in the FID is based upon 225t W and 100t Sn. Its actually averaged over a 6 year period and includes the step up to T3.5 but we'll ignore that, as it goes in favour. You cost is not $100mtu. it is higher. The fixed costs are the same, whether you produce 1t or 200t
You receive 80% of the Tungsten price. You will not and have not received $240 per mtu ever. Figure on currently receiving closer to $180 per mtu now, though throughout last year much less.
Lets take last quarter as an example. Production was 100t W. Loan interest is $1.8m (If it was paid) That equates to $18000 per ton. Lets then (wrongly) assume your cost base was $100 per mtu that is $10000 per ton, so even using your incorrect assumption of cost of production then you have $10000 (Production costs) + $18000 (Loan interest) A total of $28000 per ton that you are receiving $18000t in return.
On this basis every ton that is produced at this level of production is creating a loss of around $10k per ton. The reality is actually worse.
I’ve been thinking about what Safety mentioned in the week and his fag packet calculations. How much Tungsten would we need per quarter to break even?
Assumptions
• All values are in dollars
• The increase in Tin price keeps the cost per producing the MTU to around $100
• loan of $60million @ 12% with no capital repayment
• the price we are receiving for Tungsten is $240 per MTU
This is more matchbox than fag packet but if the interest on the loan is $1.8million per quarter then we would need:
Earnings per MTU would be $140 or 1% of a tonne so $14000 per tonne.
$1.8million divided by $14000 = 128.5 tonnes a quarter
Just my opinion and I have used a lot of assumptions. I would love to know what you guys think?