Elmer has said that he has targed a 3 year Capex payback on a producing mine. I am hoping that Capex will come in at around $3.8B or less for previously stated reasons.
So a starter pit needs to pay back something in the order of $3.8B (plus financing costs) in three years. A 3 year pit at 120 ktpd production will require about 130 M tonnes of ore.
Does anyone have any ideas about the grade of a potential starter pit?
Looking at the 2008 PFS they have starter pit info in table 25.6....
PFS 2008 Starter Pit info: From the 2008 PFS, pg 246:http://www.copperfoxmetals.com/i/pdf/Updated_Amended_Technical_Report_5.20.10.pdf
Table 25.6 Summarized Measured, Ind Reserves for SC
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ROM Diluted Grades
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Pit
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Description
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ROM Ore (Mt)
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NSR ($/t)
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Cu (%)
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Au (g/t)
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Ag (g/t)
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Mo (%)
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Waste
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Stripping Ratio (t/t)
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P 611
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South Starter
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297.8
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16.7
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0.33
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0.239
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1.685
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0.017
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241.2
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0.81
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P 621i
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South Incremental
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136.1
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14.3
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0.266
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0.207
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1.509
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0.018
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178.6
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1.31
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P 631
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North Starter
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52.9
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16.2
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0.291
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0.185
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1.94
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0.024
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45.4
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0.86
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P 641i
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Intermediate
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208.1
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14.3
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0.277
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0.148
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1.674
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0.02
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476.1
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2.29
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P 651i
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Final
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125.9
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18.1
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0.305
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0.263
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2.275
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0.027
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601.9
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4.78
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Total
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821.1
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15.9
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0.299
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0.211
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1.76
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0.02
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1543.2
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1.88
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my calculations...(may be very wrong...)
First scenario: If I adjust these 2008 starter pit grades a bit (upward) for a 130Mt pit mined over 3 years, $3.0 B can be paid off handily (over $300M in the black) in 4 yrs. --- using: 8% discount, 2011 RE metal prices and recoveries, metal selling costs, and these pumped up grades: Cu 0.40%, 0.02% Mo, 0.26 gpt Au, 1.80 gpt Ag.
My pumped up grades are not a huge stretch given our recent drill results and compared to the starter grades in the table above. I kept Moly grade down as its grade doesn't fluctuate much in the table and also our RE grade for Moly. Silver is a wild card given the legacy issues and the increases in the silver grades of recent cores.
Second Scenario: Increasing Capex to $3.8B makes a disproportionate effect on the payback. D@mn discounting! Same pit and numbers, takes us to a payback early in year 5. We will need a bigger pit with these same grades (about 170Mt) to make the same rate of daily production in the first scenario.
Keeping to the 3 yr target for payback... i adjusted grades a bit more upwards to see where the 4th yr drops away..
Third Scenaro: slip Capex down to $3.665 B, increase production to 150 ktpd (decreasing Capex, increasing production) and boost the grades again to the highest (??) ranges: Cu 0.43%, Mo 0.024$, Au 0.30 gpt (that's pretty high for SC!!), Ag 1.95 gpt. I get a mine payback in January/Feb of year 4 (who is counting months!). 165 Mt starter pit with these average grades would be required to meet this production.
These are just straw dog numbers to see how a starter pit needs to look. I think Elmer has a pretty good chance of getting to 3 or 4 years. 3 years is significantly harder to get to than 4 years.
Perhaps delaying some of the larger Capex items to a year or two into the start of production might be a strategy. I 'paid' all of the Capex in the 4 yrs leading to the mine startup with most of the spending weighted to the last 1 and 2 years before production.
Thoughts?
