Critical Minerals – (Part 3 – 26/Sep) 

Written By Tshepo Magagane

Critical Minerals – Copper Indicative CFs – as said, if you are building non-Tier 1 projects of 50ktpa; you can create Returns Opportunities whereby the payback Period is 1-yr (if everything goes well in Commissioning – worst case by Yr-3)

Q&D / back of a matchbox – does it add up as I was trained:

* At current prices – you will be producing revenues of USD500m

* At slightly to the right Cost Structure but still sort of Quintile one – AISCC of USD200m

* Great CF conversion will leave you with USD300m

* Assume Capex intensity of USD10k/tpa to come out at USD500m and PF of 60/40

* PF of USD300m

* Okay there will be Commissioning  – worst case Year 2

* Year 1 producing USD150m or so and Year 2 USD300m

* You would have paid off your debt in Year 2/3 (depending on how well Commissioning goes)

Why when Friedland says “go long Copper and leave for your grandkids

If you start to assume that as you bring that project online in c7yrs or so; prices would have gone up – you would be producing USD800m of CF – even if you assume escalation in prices to take that intensity higher (we are already using the high boundary range – range is from USD7.5k/tpa to USD10k/tpa)

Can you see the Returns profile here?

NB: what happens “when” you hit a Tier 1 deposit? High likelihood across the Copperbelt – remember, you still need 10 new Escondidas and 10 new Kamoas!

You bring in large technical partner (Miner) and financial partner (SWFs or Strategic)…

…so a good issue to tackle!