Hi Martin
Sorry to hear there is some confusion out there.
The C1 cash cost is per pound metal equivalent, which is the convention, and is reported on the front highlight page of the announcement. I can see your point regarding clarity with sulphate costs, so here goes…
The C1 cost breakdown shown in Table 1-1 is first by nickel costs, then subtracting the cobalt credits for an overall
C1 of US$0.42 per pound of contained metal produced for the entire operation at 1.0 Mtpa. As nickel sulphate contains 22.3% nickel metal, and cobalt sulphate contains 20.5% cobalt sulphate, we’ll be producing around 4.5 to 5 times the amount of sulphates for that 42 cents. So the calculations for each per pound of sulphate are as follows:
- Nickel: US$0.42 x 0.223 = US$0.09 or 9 cents per pound of nickel sulphate
- Cobalt: US$0.42 x 0.205 = US$0.08 or around 8.5 cents per pound of cobalt sulphate
The point is here that without recovering the cobalt (i.e. before Co credits), the cash costs would be US$5.59 per pound, but by recovering the cobalt (i.e. after Co credits), cash costs are reduced to US$0.42 per pound of metal (nickel or cobalt) produced by the project. This illustrates the importance of cobalt to the project.
I hope that explains this for you. Feel free to give me a call on the number below if you have any further queries.
Cheers, Matt
mce-anchorTable 1-1 – Goongarrie Nickel Cobalt Project key parameters summary – 1.0 Mtpa base case highlighted
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
| 1 |
Parameter
|
Units
|
|
|
|
| 2 |
Autoclave Throughput
|
|
|
1.0 Mtpa
|
1.5 Mtpa
|
| 3 |
Life Of Mine
|
|
|
25
|
25
|
| 4 |
Production LOM average
|
Nickel sulphate
|
tpa
|
41,500
|
55,300
|
| 5 |
|
Cobalt sulphate
|
tpa
|
5,500
|
6,900
|
| 6 |
|
Contained nickel
|
tpa
|
9,300
|
12,350
|
| 7 |
|
Contained cobalt
|
tpa
|
1,180
|
1,450
|
| 8 |
Recovery LOM average
|
Nickel
|
%
|
94.5 %
|
94.5 %
|
| 9 |
|
Cobalt
|
%
|
95.5 %
|
95.5 %
|
| 10 |
Nickel sulphate price #
|
|
US$/lb
|
8.84
|
8.84
|
| 11 |
Cobalt sulphate price#
|
|
US$/lb
|
41.63
|
41.63
|
| 12 |
Exchange Rate
|
|
A$:US$
|
0.788
|
0.788
|
| 13 |
Initial Capital
|
|
A$ M
|
599
|
746
|
| 14 |
C1 Cash Cost
|
before Co credits
|
US$/lb
|
5.59
|
5.32
|
| 15 |
|
after Co credits
|
US$/lb
|
0.42
|
0.45
|
| 16 |
AISC
|
after Co credits
|
US$/lb
|
1.00
|
0.99
|
| 17 |
Pre-Tax NPV @ 30 Jun 20, 8.0% (real)
|
|
A$ billion
|
1.43
|
1.93
|
| 18 |
Pre Tax IRR (real)
|
|
%
|
29 %
|
29 %
|
| 19 |
Post-Tax NPV @ 30 Jun 20, 8.0% (real)
|
|
A$ billion
|
1.04
|
1.40
|
| 20 |
Post-Tax IRR (real)
|
|
%
|
25%
|
25%
|
| 21 |
Payback
|
|
Years
|
5.3
|
5.6
|
| 22 |
#Nickel sulphate and cobalt sulphate prices are average recorded transaction prices for February 2018 in the People’s Republic of China, the world’s largest consumer of these products (Source: SMM, see Section 13). Note: production tonnages are rounded to reflect degree of certainty.
|
|
|
|
|
Matt Painter PhD BSc(Hons) MAIG
Managing Director
