Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
ASI: "It does beg the question though that if June broke even that puts the monthly break even at around $330,000 whereas previously it was suggested to be closer to $800,000".
Yes, indeed. Actually you can see I raised this issue in that thread from 5 August I linked back to. Around 3.5 years ago, the company was talking to shareholders about breaking even, as you say, at well towards 2.5 to three times the recent sales and budget.
So what the June figures told me is that, while breakeven at BPPM is good, it is nevertheless still operating at the level of a minnow. It is highly likely that the running costs will rise substantially as the volume of output and range of different concentrates increase (e.g. adding molybdenum). I inferred at that time that breakeven is therefore not a fixed point but a moving frontier.
Aha! Horult was right, it seems. No greater or lesser signs.
Thanks Horult. I hadn't thought of that.
So to try again,
Under $2,000 is self-evidently consistent with purities in the 20-25% range, which is right. If the price of over $8,000 were based on 36%, then under $2,000 would mean average purities of under 9%, which makes no sense.
You can find my thread on the June breakeven financials here:
https://www.lse.co.uk/ShareChat.html?ShareTicker=VAST&share=Vast-Res&thread=9736E5B9-DCB3-468E-B5AD-379F1DAD0D46
Scroll to the bottom I think to find my opening calculation.
Your main point, ASI, that some posters exaggerate the financials by not taking account of purity, is of course true. It's a very important detail.
One last try.
Under $8,000 were based on 36%, then
Urgh cut off again. Bad signal.
To resume where I was cut off:
Under $8,000 were based on 36%, then
Message was cut off.
ASI: it might indeed be that the error lies with the app, not you, but the fact remains. The >$8,000 price is for cathode, not concentrate. I shan't take it up with the app service as I don't use that tool and have many far higher priorities.
A price of $8,000 were based on 36%, then
ASI: "The figure of $8316 per dry metric tonne of concentrate is the global average based on a concentrate of 36%."
I've appreciated your knowledge of diamonds, as you know, which was one of the few things keeping my interest in the BB this year.
But on the issue of copper pricing, your basis of calculation is mistaken. That price bracket is based on grade A copper cathode, i.e. very close to 100%, not on concentrate pricing.
I can't comment on the app you mention but internet searching does very easily establish the sort of price bracket for copper cathode. More specifically, the LME (which of course is a very influential market) is very clear:
Live copper price page:
https://www.lme.com/en/metals/non-ferrous/lme-copper#Trading+day+summary
You will see there a red tab labelled 'contract specifications', taking you here:
https://www.lme.com/en/Metals/Non-ferrous/LME-Copper/Contract-specifications
There you can download the LME Rulebook as a PDF of some 384 pages. The LME contract rules for copper are at page 6-11, i.e. page 11 of Part 6 (page 213 of the PDF if my scroller is displaying correctly).
The formal benchmark standards, which are cathode standards, are expressly set out there.
ASI: actually minus nothing in your case because you've already told us that you're operating here on a free carry. So why would you now claim a loss? Odd.
Gemstar: "Apparently it's a question they used to ask at SAS selection, for some reason".
Actually, it's a question asked by Robert De Niro's character in the movie "Ronin", while addressing Sean Bean's character. Bean's character has presented himself to the team they're in as an SAS man and De Niro's character is calling his bluff.
I can offer a spoiler alert and tell you how the exchange pans out; but you might want to see the movie instead. It's a very fun action romp with a great cast (others too), great direction by the *legendary* John Frankenheimer, and one of the really outstanding movie car chases in an over-contested field.
Nevergonnaretire: "Sandy, did you ha e a chance to dig deeper into production figures?"
Sorry, I did mean to over the weekend but a lot of real life took precedence. I should hopefully churn some more numbers either Wednesday or Thursday. I'm interested in processing plant efficiency at BPPM and also what we've learned about the wider corporate budget (both operations + overheads) *outside* BPPM. So I'll put out threads about these numbers asap.
Gemstar: how odd. You sound like you actually buy all that. Good luck.
Muck165: "Just an observation but this para is missing from todays RNS. Probably irrelevant?"
Probably not irrelevant, IMO. When Mnangagwa recently came out voicing solidarity (or whatever expression he used) with Russia's invasion of Ukraine, I posted then that the company would probably be willing to walk away from Zim if that's the right thing to do politically.
Dropping the Zim para from the company's blurb in an update RNS is a provisional step in that direction in case it becomes necessary. It's nothing definitive and makes no commitment either way. A possible mining concession remains on the website. But the company will certainly be needing to review the position, probably in dialogue with the British Embassy in Harare, IMO.
Could blow over if Zim walks back that foreign policy angle. But could become too toxic for Vast if Zim really digs in on this.
Wait and see, IMO.
Btw, Vast never quite got round to definitively killing off its Botswana interest, so far as I know, so the Vast diamond "division" could potentially pivot from Zim to Botswana.
Good observation, btw. Always read the RNS footers... 👍
Thanks xcoder. All of that, if materially different from the pre-existing position, and reaching any conclusion, would have needed to be RNSed. I don't think any material changes were.
How could Vast strike a measurably better deal with Mercuria than before when Mercuria is the creditor doing Vast the favour of rolling the debt? AP has a long history of chatting carp in interviews, unfortunately.
But as regards the relationship more generally, my guess is that there's been a semi-mutual plan that (a) the company hits breakeven on its ore extraction and copper concentrate production; (b) they then ramp up volume to "nameplate", which might create a cash margin to play with at the mine itself; and (c) they apply that cash margin to expanding the scope of the BPPM operation from the tiddler it currently is into the monster it was advertised as being.
More specifically, I think there will be costs to bringing on a molybdenum concentrate. Like the copper concentrate, molybdenum might run at a loss for a while until it's optimized. So they will probably look to cross-finance the molybdenum from the copper until the molybdenum hits profit in its own right. Etc. Etc.
What that, IMO, means is that "breakeven" is indeed a moving frontier, not a fixed point. Revenues will rise but so will the budget.
I think the company could really be a lot more forthcoming about its plan for BPPM going forward. Note that they bounced off the idea of profit (once upon a time targeted April) to become "nameplate" volume, which is a production comment, not a cash comment.
Xcoder: btw, glancing back, I should clarify. I meant that the Plc management salaries are a separate corporate overhead budget; obviously the miners are a BPPM budget, yes.
Thanks xcoder.
Xcoder: do let me know if you can find that. If so, it's slipped my mind and I'd be interested.
Xcoder: I don't recall seeing anything about renegotiation. But we were never told about the terms in the first place 🙄
Nevergonnaretire: yes, the BPPM budget and the overall corporate budget are two very different things.
I definitely want to return to this over the weekend as we can use some figures to find the difference.