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I have been updating my figures for the by products credit. Using todays spot prices for Copper, Cobalt, Platinum and Palladium we now have a by products credit of $1,289,809,115. At PFS stage we had $855,822,190. Increase of $434m. If we allow say 20% for metals royalty and net profits tax we have additional profit of $347,189,539. Divide by 15 years it equates to $23m per year.
The improvement above is substantial. Plug in improved recovery rates especially for the palladium and the platinum and the figure quickly moves up.
Separately I have had another look at the sale of IG copper to RCC. IG were using a copper price of $3.25 per lb. Spot was around $2.80 per lb at the time. I should imagine that RCC used this factor in the negotiations hence why the eventual sale price was not as good as anticipated. ie About 11% of NPV. May explain, in part, why the Board are willing to wait.
Should have added. Copper gets to $5 lb and the additional profit is $28.5m pa.
Nice post Garf... good to see analysis of the facts rather than emotional rant.
There are a small handful of people who know what's really happening inside AMC at the mo...
... but I'm still optimistic we will see our pay day...
From the FPS.
"The LGM product is anticipated to produce substantially increased revenues derived from credits related to the recovery of by-product metals not available to the TS Option."
It all depends on the route they go down.
TDT
That should have been.
"From the PFS."
DTD
TDT,
Does indeed depend upon the route taken. Slightly changed now with the copper concentrate.
In terms of the numbers. I have further expanded my analysis. Revenue at PFS stage for the FFS option is $7.7b. By Products credit at current spot take this to $8.1b. (nickel at $8 lb.) Assuming that the prices of copper, cobalt etc had not increased at all you would need a nickel price of $8.51 to generate that income. So if you think that the project works at say 10lb the reality is we are a fair way there with the by products credit.
Improving the grade or recoverability will have the same effect has an increase in nickel price. RY may actually only need a nickel price of say $9 lb and the by product credit / grade improvement will take him the rest of the way.
Assuming that RY is busy undertaking the relevant work and making progress the strategy is correct.
The Financial statements will be due late June and they should show an improved balance sheet. Will that be the point he starts telling shareholders what he is doing.
Hi Garf,
That's if we take it to production ourselves.
However someone else with deeper pockets could find Kun Manie very attractive at current pricing levels.
Remember everything has a price and its what it's worth to someone else.
Have a good weekend.
Noloss,
Whichever way they go they will need robust calculations to pass the relevant due diligence. I think that is where IG copper missed a trick. I suspect that experience is what Tom Bowen brings to the table and why in part the delay. Once bitten and all that.
Atb.
RL,
Thanks for additional info. Very useful as usual.
I have previously watched TB's video and was impressed with the whole project and TB himself. Must admit that I had missed the difference in NPV's due to the FX issue although I am aware of it after having had a look at Nornickel accounts. They note it as a key sensitivity along with nickel price. Get the point re NPV's and accuracy etc. Point is / was - commodity price and the robustness of the finances will play a part of the sale price calc.
In terms of TB - What is your view? Why has he joined us?
I have also messed about with my calcs. If we assume that we need $10lb - based upon the PFS would give total revenue of $9.4b. Assuming a by products credit at current spot, Nickel at $9 and an increase in nickel payable of say 21,000 tonnes would give total revenue of $9.4b. $9 lb achievable in the next 12 months?
Garf
Genuine question.
Can someone explain why the $/LB rate for nickel keeps changing?
RY once said $4 would do it, then posters started saying it needed to be $6.
Then that went to $7.5 would be required to make KM commercial.
The PFS stands at $8.
Now we have $9-10 being thrown around.
Whats next guys, $12-15 lb ?
Or will that get revised up?
RL, I remember a very specific conversion between CT and you.
Nickel was at $5.5 lb, CT was suggesting that would work and you categorically told him it has to be $7.5 that was endorsed by Vertigo.
"In terms of TB................. Why has he joined us? "
I read somewhere, can't remember where, that TB put RY onto Kun Manie way back when. They're buddies of old.
$10/lb is a bit of an ask if past performance is anything to go buy. Likewise $8/lb.
https://www.dropbox.com/s/74i2628i6hpkwgn/screenshot%202021-05-08%20at%2010.06.58.png?dl=0
Of course its not just getting up there but staying up that's the issue. Then you have to look at what's driving it up; increasing demand, faltering supply or simply a weakened dollar.
The paucity of information from Amur doesn't help and makes any assessment essentially a guess at best. At least we have some intelligent guesses which is something to be thankful for.
TDT
"The paucity of information from Amur doesn't help"
Indeed and that is the major spanner in the works when none of us know WTF is going on.
TDT,
TB has put in £160k of his own money. If this goes pear shaped they will not be buddies for much longer. Agree with you that the Nickel price need to stay at a level.
As an aside I have emailed NRR a couple of time re production figures / accounts. To date no response . Iron ore at $180 + per tonne should be able to generate some good news.
Garf
JoeBass, You're correct, the price per lb has changed over the years. I too remember when it was $4, then $6, then $8 and as you say $10 was mentioned around 2019.
Garf
I remember the brouhaha that surrounded TB's investment back in August 2019. It didn't do much for the share price at the time pushing it up to 3p temporarily only for the price to collapse to below 2p in the following weeks. I've never been particularly sold on the commonly held view that directors need to hold lots of shares in the company they run to have any credibility so for me him holding shares is a bit of a non-issue.
If I'm right and TB was the person who pointed RY in the direction of KM in the first place then him investing £160k may be a belated attempt to help his friend out of a hole especially if he was the one who put him in it in the first place.
As for NRR good luck with that one. As a private company they're not obliged to say or do anything. Their last newsletter is 5 months old. That's the only place where I suspect you'll get updates.
TDT
https://www.dropbox.com/s/74i2628i6hpkwgn/screenshot%202021-05-08%20at%2010.06.58.png?dl=0
Looking at TDT graph, the time I made good money from AMC was during the highs. 2008. 2011 and 2012. If nickel goes higher this will be good.