Tonnes
Cu Head of Recovered Pt Grade
Grade % 0.15 Co t 6,482 in Concentrate g 1.29
---------------- --- ------------ -------------- ----------- ----------------- ----------
Recovery Pd Grade
Cu Delivered t 138,506 of Pt % 69.00% in Concentrate g 1.547
---------------- --- ------------ -------------- ----------- ----------------- ----------
Grams
Co Head of Recovered
Grade % 0.01 Pt g 8,139,386
---------------- --- ------------ -------------- -----------
Recovery
Co Delivered t 9,821 of Pd % 75%
---------------- --- ------------ -------------- -----------
Grams
Pt Head of Recovered
Grade % 0.13 Pd g 9,266,459
---------------- --- ------------ -------------- -----------
Pt Delivered g 11,796,212
---------------- --- ------------
Pd Head
Grade % 0.14
---------------- --- ------------
Pd Delivered g 12,355,279
---------------- --- ------------
%MgO % 14.9
---------------- --- ------------
%S % 1.2
---------------- --- ------------
Total Material
Mined t 220,450,000
---------------- --- ------------
The concentrate will be transported by truck fleet from the site
to the rail siding on the Baikal Amur rail line located
approximately 320 road kilometres to the west. Supplies and fuel
will be backhauled to the site.
The most critical component to the Blueprint was the decision to
construct and operate a captive smelter located adjacent the BAM
rail line. This location provides access to coal and limestone
necessary to smelt the concentrate. It also allows the Company to
capture the revenue generated from all metals, whereas toll
smelting revenues are limited to only 70% of the nickel and 50% of
the copper and nothing from any of the by-product metals. Penalties
and transport fees are also incurred. The capital cost for the
construction of the smelter and attendant refinery are substantial,
however, the PEA results indicated that the additional revenues
more than offset the cost and ultimately provide a higher Net
Present Value for the global Kun-Manie operation.
Input Parameters and Financial Projections
The pro forma cash flow model for the Operational Blueprint
newly estimated Q1 2015 operating costs. Updated capital cost
estimates reflect the increased nominal production rate of 6.0
million tonnes per year and specific commodity pricing factors.
From first principle design considerations, the Company
estimated the cost per tonne of ore. These costs were generated
based on Q1 2015 estimates. The Operational Blueprint operating
costs are projected to be 74% higher than those estimated in
2007.
Estimated Cost Per Ore Q1 2015 2007
Tonne US$ PFS
(AMC Sourced) US$
----------------------------- -------- ------
Mining Cost Per Ore Tonne* 9.10 3.46
----------------------------- -------- ------
Processing and Tailings 10.51 6.82
----------------------------- -------- ------
G&A 1.72 1.46
----------------------------- -------- ------
Transport From Mine to
Smelter 2.26 1.93
----------------------------- -------- ------
Smelting Cost Per Ore Tonne 11.27 6.33
----------------------------- -------- ------
Total Cost Per Ore Tonne 34.86 20.00
----------------------------- -------- ------
*The cost per tonne for mining is based on the total mining cost
of open pit and underground
ore divided by the 90 million tonne life of mine production
total.
The updated capital costs for the Blueprint design were
estimated using Q1 2015 available information from public sources
and calculated by staff. A summary of the initial and sustaining
capital requirements follow:
Capital Cost Category Initial Sustaining
--------------------------- --------------- -------------
Total Capital Expenditure $1,381,473,753 $474,735,562
--------------------------- --------------- -------------
Infrastructure & Permanent Facilities
-----------------------------------------------------------
Studies $5,000,000 $-
--------------------------- --------------- -------------
Road - 320 Km Access
Road $312,000,000 $7,000,000
--------------------------- --------------- -------------
Power Generated
-6mt $117,810,000 $3,150,000
--------------------------- --------------- -------------
Site Facilities $9,865,000 $-
--------------------------- --------------- -------------
EPCM (Road, Power,
Facilities) $6,048,404 $97,745
--------------------------- --------------- -------------
Processing $133,285,000 $4,255,000
--------------------------- --------------- -------------
Tailings $13,646,349 $23,277,818
--------------------------- --------------- -------------
Electric Furnace
Smelter $126,500,000 $4,950,000
--------------------------- --------------- -------------
Converter Smelter $189,750,000 $3,300,000
--------------------------- --------------- -------------
Refinery $341,550,000 $2,750,000
--------------------------- --------------- -------------
Smelter Infrastructure $22,000,000 $-
--------------------------- --------------- -------------
Haul Roads $9,735,000 $19,911,000
--------------------------- --------------- -------------
Ikenskoe Diversion $- $2,000,000
--------------------------- --------------- -------------
Total Fixed Asset $1,287,189,753 $70,691,562
--------------------------- --------------- -------------
Mobile Equipment
-----------------------------------------------------------
Transportation
Fleet $14,989,000 $28,950,000
--------------------------- --------------- -------------
Mining Fleet $79,295,000 $375,094,000
--------------------------- --------------- -------------
Total Mobile $94,284,000 $404,044,000
--------------------------- --------------- -------------
The economic potential of the Operational Blueprint was
determined using nickel prices of US$7.50 per pound (US$16,534 per
tonne) and US$9.50 per pound (US$20,940 per tonne). The lower price
of US$7.50 was selected as the base case as this was the long term
nickel price from the 2007 SRKPFS. The second is the long term
price projection in 2017 by TD Securities, which predicts from US$
9.50 to US$10.00 per pound. The Company utilised the lower limit of
US$9.50 per pound in its economic assessment. Other commodity
prices used in the generation of the cash flow model are provided
in the table below.
Copper Per Pound $2.75 Per Tonne $6,062.65
----------- ----------- ---------- ---------- -----------
Cobalt Per Pound $13.52 Per Tonne $29,806.19
----------- ----------- ---------- ---------- -----------
Platinum Per Ounce $1,123.00 Per Gram $36.19
----------- ----------- ---------- ---------- -----------
Palladium Per Ounce $768.00 Per Gram $24.75
----------- ----------- ---------- ---------- -----------
The Operational Blueprint established by the Company is based on
external information and an extensive amount of internal work that
is to be independently audited. Also, the pro forma cash flow
models compiled by the Company are viewed as "forward looking
statements" with risks, uncertainties, and other factors which may
vary from actual results, performance or achievements of the
Company resulting in material differences. A key factor is that the
Company has already compiled a shortlist of independent mining
consultancies to undertake a comprehensive audit of the Company
PEA.
The projected financial potential of Kun-Manie based on the
Operational Blueprint covering a 15 year production period is
summarised below. Note that initial capital cost requirement for
the Blueprint is $US1.38 billion for the vertically integrated
operations.
Nickel Price Per Pound $ 7.50 $ 9.50
----------------------------- -------- --------
Nickel Price Per Tonne $16,530 $20,938
----------------------------- -------- --------
Net Present Value in
Billion $US (10% discount) 0.71 1.44
----------------------------- -------- --------
Internal Rate of Return
(post-tax) 21% 32%
----------------------------- -------- --------
Years Payback 4 4
----------------------------- -------- --------
The product of ten years of successful exploration, obtaining
the production licence, and conducting engineering works, the PEA
has permitted the Company to set a forward looking plan to direct
the project through additional engineering work, leading to a
Definitive Feasibility Study. This plan is being compiled and will
be updated based on the results of the external audit of the
PEA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUWSRRVVANUUR
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