RE:Realist2018I believe you too are near bang-on in your assessment. The numbers work in the PEA. However, it's worth noticing that the PEA initial capital forecast of $43MM (indeed low) only builds a 500 tpd starter mine/plant, a couple of ore-truckloads per day for Syrah. The starter mine/mill is replaced (not expanded, I believe) by Year 7 with a properly sized large-scale mine/plant forecast to cost an additional $84MM funded via projected internal cash flow based on an average forecast blended sales price of $6435/ton. The PEA numbers work because they were made to work.
Where I disagree, grade always matters to a mine. The Coosa starter mine/mill is forecast to deliver raw graphite concentrate to the end-use processing plant at an operating cost of $1350/ton ($1500/tonne). That’s higher than present market price, and does not include capital amortization of the mine/mill, which could be as much as $700/ton depending on how much of the starter mine/plant can be salvaged to build the larger mine/plant.
About one-half of the $43MM forecast initial capital goes to building the high operating cost starter mine/mill, the other half goes to building the purification plant which makes all the money.
So, if all graphite concentrates were equal and PEA forecast numbers are true, for $20MM (or so) CSPG/WWR/Somebody might build a graphite purification plant fed by graphite concentrate procured via offtake from a third-party supplier. Syrah comes to mind.
So why not? According to CSPG’s story, its process flow is tailored to Coosa. However, I believe this is less of a strict technical issue than a need to march along the path of NI43-101, despite the fact (as you point out) that all of CSPG’s testing has been done on graphite from Coosa. The same tests can be performed on other graphite, and I expect others are doing so. I believe it boils down to this: without a mine of its own in the equation, CSPG genuinely is a technology company and as such it would be mired within its listing designation as a mining company with no NI43-101 path to follow.
Don Baxter had the vision, but was handcuffed. I expect he realized that he could procure graphite concentrate for less than he could mine it, but that would admit that Coosa wasn’t a critical ingredient to the story, to the detriment of the CSPG share price and to the benefit of potential offtake provider(s), perhaps one where he formerly worked. Didn’t happen; perhaps be glad.
Under Westwater, the landscape changes. Youknowwhat, it’s true that projects do not get financed without documentation; however under Westwater that no longer has to be a true NI43-101 Feasibility Study building from Coosa. One main difference between a true NI43-101 Feasibility Study and a non-Exchange filed “bankable” is the level of responsibility assumed by the authors. Under NI43-101 that’s a lot, and costs a lot ($3-6MM per the PEA). In the US, that can be nothing, and cost less, leaving savings for promotion and hopefully elevation of the share price. That’s the positive I mean to point out.
As for myself, I see the value of Coosa as a hedge against high future graphite offtake prices, and as a USA flagged niche source to Department of Defense contractors, whose needs may be limited and intermittent, but who will pay very top dollar because they can pass along the cost. Looked at that way, perhaps the Coosa sale price is fair, just very disappointing.
Numbers were taken or calculated from the PEA. Please check my arithmetic and do your own DD.