Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Have re-listened to the end April interview brian did.
As well as the 10 holes planned for Goela, he also mentioned drilling 6 to 10 "wildcatting" holes on other anomolies to complete the 2,000 meter drill campaign - he did say though "we won't go into the detail of those yet" - am left wondering if he meant he didn't want to say which anomolies were being drilled (or hadn't decided) or that he didn't plan to release the drill results when they come.
I’ve found another snippet in the Q1 financial report for Tronox Brazil (it is separately listed and not wholly owned by Tronox US)
https://api.mziq.com/mzfilemanager/v2/d/d3c7bc8b-55d2-4ca5-9ca1-27626026aecf/011490e9-fffc-7310-9303-9c939f573ade?origin=2?utm_source=MZ+Cristal+RI&utm_medium=Arquivo&utm_campaign=Download
“In accordance with the Material Fact disclosure on the depletion of the Guajú Mine, located in the Municipality of Mataraca – PB, the Company also informs that the production of Zircon, Rutile and Kyanite was terminated in 2020. The commercialization of these mineral ores, including Zircon, is expected to occur only through the second quarter of 2021, according to the present inventory levels.
The production of ilmenite is expected to terminate in 2021. The supply of ilmenite to the Bahia plant by the existing inventory is expected to last up until the year 2023. After such time, the plant is expected to be supplied through an alternative source, which could include the importation from one of the Tronox Global subsidiaries.”
So the plant will stay open and they need new feedstock sources! Maybe we are too small for this to work, but think it’s interesting.
Think I’m showing my impatience to know how we’ll get value for the Ti!
In the course of looking at TNG and neometals, I came across Tronox who have both a mine and Ti pigment plant about 1,000 apart from each other in NE Brazil. There’s an interesting comment at the bottom of page 5 of their Annual Report (link below) saying the mine has reached end of life but the plant (capacity 60,000 tonnes p.a.) has enough feedstock to keep going to 2022. Begs the question as to what happens after this, not sure I’ve yet stumbled across many other Brazilian Ti producers. Maybe it will help strengthen support for alternative local Ti processing in due course.
https://s1.q4cdn.com/960380961/files/doc_financials/2020/ar/2020-Tronox-Annual-Report_FINAL.pdf
Dcat, thanks. I’ve found the same article.
I became convinced listening to the recent Sarah Lowther interview that Brian had a clever temporary solution (his third option) to extract some early value for the TiO2. He has said a couple of times now something that implies to me he wants to go for the lowest initial capex route even if it is not the ‘best’ route. I think this makes sense if there is a way to do it, just to get the show on the road and get cash flow.
I know Largo have approved a Ti benefication plant project but not sure it will be up any time soon. So I started looking at Fodere’s current status. Shipment costs to Fodere’s planned plant in SA might be prohibitive - and there is no information to say when it will be built. So I’m at a bit of a loss as to what Brian’s short term plan might be. Guess we just have to wait to find out!
Been trying to find out where Fodere is up to in the hope it will offer some outlet for the non-magnetic ore. Wished one of the recent interviews with Brian had asked about this but I guess the questions are scripted to some extent. But all I see is the recent Companies House filings….
https://find-and-update.company-information.service.gov.uk/company/09362025/filing-history
….which don’t make great reading, being recently threatened with being struck off for not filing the 2019 accounts - that is now sorted it seems but it doesn’t send a great message about their corporate governance if they are thinking of an IPO. You don’t get threatened with being struck off if you’ve not ignored previous reminder notices. Not good. Hope their technology is better than their admin and Brian is closely monitoring this not insignificant investment.
SM - thanks. I think your $7.60 for the operating cost includes the $1/tonne for G&A cost mentioned in the footnote to the resources table? I think this figure is a red herring and (to get to the quoted undiscounted cash flow $136.3m figure) they must have used a higher figure in the PEA calculations also considering sales and marketing costs etc. But then much of the rest of our difference is mainly to the iron ore price used, I was just sticking with the figure in the PEA.
SM, although my sentiment is the same as yours, I do get to a lower cash flow figure to you.
The PEA said the project generated $136.3m post tax undiscounted cash flow. I assume that is net of the $9.5m initial capex so gross cash flow net income would be $145.8m, spread over 2,590,000 tonnes is ~$56.3 per tonne. For 300,000 tonnes, that’s $16.9m per annum.
There’s actually $1.9m of working capital outflow listed in the detail of the $9.5m capex (so true capex is only $7.6m) which logically should come back in at the end of the project – adjusting for this the figures are pretty similar, $55.6 per tonne or $16.7m for 300,000 tonnes.
I’m not sure how the existing PEA got to a 3 month payback/>300% IRR unless it was either assuming a flatter output ignoring the trial mining limit (on the basis it was just intended to show the viability of the project assuming a full mining licence would eventually follow) or perhaps included some upfront offtake money (followed by discounts on future sales) which for me is more akin to a financing arrangement, or something else because they didn’t share the detail. But a 6-7 month payback without offtake/within the 300K initial trial mining limit is still fantastic, especially if it ignores the Ti credit potential etc.
I’m hoping we do get a PFS next, not another PEA, so it includes more project specific assumptions.
My working might be too simplistic, let me know if you can spot a disconnect.
Thanks Swizz. Seems to me the environmental permit is the key thing now.
From what is written, you think the 2 years starts now or when the environmental permit/DOU announcement is done? Or that it doesn’t matter when it starts on basis unless something goes badly the licence would be renewed after 2 years?
So basically my assumption reading this is that the publication in the DOU is on some future date that Jangada can choose, and an environmental licence needs to be in place by then? But admittedly I’m guessing how this works.