RE: The Lundin/ Goldquest agreement.......7 Nov 2019 08:18
Hi Guys,
I got a response from LR this morning....It gives me a great level of comfort that he confirms the agreement is still valid.
However, he did add a few pertinent points that I am still trying to digest....full response below...
The Lundin agreement as announced at the time of the Toral acquisition by FCR/Europa, is still in place.
I have seen there seems to be some concern on the bulletin boards about rights and while I will not comment on Lundin as it would be wholly inappropriate please find below an extract from the companies own website on its Spanish Neves Corvo operations, as to scale:
'The processing facility at Neves-Corvo comprises two plants. The copper plant processes copper ores and has a capacity of approximately 2.6 million tonnes per annum (mtpa). The zinc plant, which can process zinc or copper ores, has a capacity of approximately 1.1 mtpa and is currently undergoing a significant expansion to 2.5 mtpa capacity.
Copper and zinc concentrates are transported by rail to a dedicated port facility at Setúbal from where they are shipped to variety of smelter customers that are primarily European based. Lead concentrate is containerized and trucked to ports for overseas shipment.
A Zinc Expansion Project (ZEP) was approved in 2017 and is in construction. The ZEP is to increase zinc mining and processing capacity to approximately 2.5 mtpa generating an average of 150,000 tonnes per annum (tpa) of zinc in concentrate over 10 years. Expanded zinc production is anticipated in 2020.'
Toral is looking to be developed into a project with strong operating margins and is, in my view, a highly attractive proposition (See Rio's CEO talk recently on being more nimble/scaling), it also does have real scope for more scale but at present the resource is as stated. For a major buying into half a project of this type , even with a controlling interest- given the current scale, purely by asserting rights on a junior, ie; with no pathway to 100% or ability to prosecute further meaningful work, would not be something that might be attractive. Reasons being:
1. Capital efficiency
2. Majors are very 'mess adverse' with junior companies which is why assets are nearly always held in subco and hostile takeovers are rare
3. Ability to plot a mid-long term pathway to forecast likely production contribution
4. If an actual miner wants an asset its generally because they have decided its worth taking considerable time and expense to focus on the project
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