The second quarter financials verify that for Murray Edwards to maintain voting control of the company , III must either partner Red Chris or Murray Edwards et al must equity finance development.
My back of an envelope calculations indicate there is easily a billion tonnes in the deposit, plus "blue sky" in a second deposit to the west of the Main zone. Permits aside, right sizing development would be 100,000 tonnes/day, resulting in a 35 year mine life. A high grade starter pit over the east zone may return capital in about 24 months. I expect a deep underground block cave development would be a "brown fields" project as this alone could be another $700 million in development costs.
III has partnered in the past on the Huckleberry mine and most recently, on Ruddock Creek with Mitsui/Itochu. If III goes the partnership route, I would expect terms could be 40-50% of concentrate flow for 100% of development capital. My guess on likely a partner in order include: RTP (they know deep bulk tonnage mining and have partnered before), Mitsui/Itochu, BHP, Xstrata, Teck, or perhaps some Chinese company.
Regarding timing, if III wants to complete mine development when the power line is turned on Dec 2013, they must either partner or finance soon, as initial work on the power line is scheduled to start Dec 2010. Pre stripping needs to be done (condemnation drilling for waste stockpiles and tailings will be done soon), and equipment orders can take 2 years or more to fill. |
