Good iii post (up on ADFN)2 Sep 2015 10:04
plasbury on ADfn quoting Derek from iii: ......... Plasybryn 1 Sep'15 - 19:05 - 52793 of 52814 4 3
Hope DEREK doesn't mind but this is his excellent post from iii
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The LOM C3 all in costs are $1.73 lb according to the technical report completed by Behre Dolbear in February 2013. However that was the same report that estimated the capital restart costs to 5 mtpa at double the cost they have just restarted the plant at. Since 2013 there have been some significant events. The Oil price has been slashed, the exchange rate has become extremely favourable, wholesale electric prices in Spain have reduced. The company have delivered an enhanced production to 7.5 mtpa for the cost of 5 mtpa. An extension to the LOM from drilling that will be incorporated into a new cost estimate to be produced within 45 days of the drill results/resource update. With improved economy of scale a predicted extension to LOM and actual physical savings in fuel, wages and Euro sourced materials.
Lets say conservatively at 7.5 mtpa throughput produces 30000 tons of copper in concentrate. If the LOM C3 costs come down to $1.60 a lb which is really extremely conservative then we can look at $1800 a ton clear profit at the current depressed Copper price the profit is £35m or so a year.
It really takes very little to turn £35m into £70m at 7.5 mtpa..... just a $7000 a ton Copper price.
The estimated most economic capacity is between 9 and 10 mtpa and the aim is to be there this time next year, we can expect close to 40000 tons a year on that which at todays depressed Copper price produces £46m or so a year profit. At $7000 a ton we can expect £92m a year profit.
Of course the Copper price is more like $5000 than $7000 but it is quite achievable in the mid to long term in globally better times.
Once 9-10 mtpa is reached the company will need to do something to dispose of all of that profit and that is when the dividend payments will start. Do not expect them before the end of next year but when they start they will be substantial; PRT is a cash cow.
My 3-5 year goal is still 20p in share price and dividends.
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