I will not lie, I would like to see a 10 year mine life of 1500 tons a year. Not because we need it but because it gives us time to understand the complexities of miller. One of the advantages of this deposit, you have no overburden and your strip ratio is literally Zero, when vein chasing.Every shovel full has ore in it.
The disadvantage is you are vein chasing. A comment was made on the VTEM on one of the other boards. The reason that VTEM does not work on Miller is the same reason it does not work in Sri Lanka. With Miller we have veins 5-9 meters wide, and we have veinlets that are as small as Sri Lanka. When you get the read out from VTEM on either of those projects it looks like one large blob of graphite because multiple veinlets can distort the earths magnetic field just as any larger vein does.
So the whole concept of VTEM was at best to identify the "there is something there". That truly was the end of its usefulness. PhiSpy allows you to illuminate veins in a small area, you walk around holding a held hand unit and it tells you if you are on the left or right side of the vein, how long it is, and if you are at the end or not.
So even though the process is painstakingly slow, when done you have in our case, a surface vein structure X wide, X deep and X long that you can then add to your rolling resource. A rolling resource is not unlike a gold company that is exploiting gold veins ie GoldCorp and then through drilling adds more resource beyond the end of their mine shafts. You will note GoldCorp does not have to do ANOTHER 43-101 complaint resource calc each time it steps out with a drill program.
The same will apply to us. So if we can start with 10,000 to 15,000 tons this year, thats a winner. Why? Because during the winter of 2017 we will be building and installing equipment. Summer 2017 we should be able to start processing the graphite. Now you may say, well, you won't do 1500 tons the first year. Actually we can, we can do 5000 tons per year with the equipment we will have but choose to do 1500. So doing 1500 tons in a half year is not an issue.
So why not do 5000? Simple, we do not want to run out of resource before we expand. So the labor being used to do 5000 will be instead used to expand the resource. So the facility will literally operating at "idle" speed doing 1500. So the really will be no need for force mageur because if you are shutdown for 3 days, when you start up the 4th you could process all the 1-2-3 days material in one day with the fourths. So you are really not taxing your system.
What this also eliminates is startup pains. When and if the system breaks down its not a crisis to get back up and running to meet demand.
At the sametime as all of this is occurring we are going full out on Marble Production
Now, what happens when you are at only 1500 tons vs 5000? Well for starters, life of mine increases at 1500 but OPEX is distributed across a longer period of time. That is to say, if you had 15,000 tons and were doing 5000 tons per year, your OPEX is just for 3 years. If you are doing 1500 tons over 10 years then your OPEX or reoccuring costs are incurred for 7 more years. So when you add in your opex to your lower tonnage, the processing+OPEX numbers rise.
Your processing costs remain constant theoretically but you are paying the guy who is loading the float plant for 7 more years then if doing it for only 3 years.
Too give you an example ZEN suggests they can purify for $2100US but their OPEX over 22 year mine life divided by their processing tonnage over that period makes there actual cost $4100US per ton.
So in ZENs case it costs $2100US to process but an additional $2000 to pay for trucks, people, electricity, etc etc etc. One is the price to process, the other is the cost to have people trucks diesel to do it. Now add in the cost to Round and Coat ($700US+)and you can see its not as profitable as people will have you believe.
ZENs OPEX number is $1.25billion over 22 years.(In the PEA)
So the higher the production rate, the lower the all in costs per ton OPEX.So in ZENs case if they decided to do 60,000 tons over 11 years the OPEX would be very close to half of the $1.25billion. Then when you add in your OPEX it would be about $1000 for OPEX per ton not $2000.
This is why people say that in 5 years ZEN will have a tough time if they are only producing 99.9% material. $4200US is there break even point. In 5 years from now every Graphite Guru believes LI-on has to be down to 1/4 of what it is now.
This is also why I am suggesting ZEN will remove the West Pipe from the PEA eventually and do another cost analysis that will only show East because it will be the only way they could possibly make this work.
ZENs OPEX is a guess, the difference with our PEA is we will have actual costing for labour, equipment and buildings, electricity, gas, sewer, water, gloves, furnace gear, etc etc. So our OPEX should be near 97% accuracy.
As we add more to the resource, life of mine increases and OPEX across production drops if we increase flow to 3000 or 4000 tons etc etc. |
