I took a first pass at the analyst report I linked in the previous post. It deserves closer study, imo, which i will do, but meanwhile, here is a small section of the 30-page write-up:
We simulate a 50,000 mtpd open pit mine with a zero strip ratio and a 100 mtpd
underground mine using the very same tunnel Cyprus Minerals established prior to 1988.
The company may consider up to a 70,000 mtpd scale, but we simulated a moderately
smaller 50,000 mptd scale owing to our concerns as to whether some of the minerals
could be sold. It is also possible that the underground scale could be larger than 100
mtpd, but even 100 tonnes per day could exceed future growth of the beryllium market.
We were very cautious in estimating costs. For example, we used a $2 per tonne open pit
mining assumption, in contrast to Seabridge Gold using $1.50 per metric tonne for its
project virtually atop a glacier in northwest British Columbia without roads or power yet
in place. Round Top lies 4 miles northwest of Interstate 10 near rail and power lines 85
miles east of El Paso, and its mining costs should be half of Seabridge Gold’s.
We estimated milling at $10 per tonne due to sheer economies of scale, and underground
mining at $150 per tonne even though it is easily accessed walk-in tunnel horizontally
with no shaft or initial vertical movements. The late-1980s vintage tunnel built by
Cyprus Minerals has been maintained by the Texas Bureau of Economic Geology.
We estimated a $750 million cap ex requirement, which is on the high end of the
company’s $500 to $700 mm expectation for a one-third larger plant. Further, we
estimate the company pays the federal government $200 million in annual expenses
towards a central federal REE processing plant’s use, which may cost the government
$250 to $500 mm to build. Further, we provide for $226 million in operating expense
contingency, which primarily involves either recovery rate shortfalls or extra expense to
meet recovery targets.
We estimate the company funds its $750 mm cap ex budget and ongoing corporate
expenses, exploration expenses and feasibility study expenses with its own resources.
These include $19 mm in current cash balances, $35 mm from warrant exercise expenses,
$200 million from advanced sale of future tin production, $300 mm from advanced sale
of half of future uranium production and about $225 mm in bank debts, which could be
repaid in the first year. |
