RE: at the worst we''''ll be bought outThe most Falcondo should toll-charge is $4/lb Ni tax free for GMI's 1.3% Ni grade at today's Ni price
No, I totally disagree. There is no incentive for Falcondo to do that. They'd make far less money tolling at $4 lb as they'd lose all the money they'd make from processing their own ore. You really should run the numbers to understand why Falcondo would never agree to toll for $4 lb.
A reasonable scenario is for GMI to share (maybe 50-50) the added profit that comes from processing 1.5% vs 1.18% ore. That's about $100 tn additional profit at current prices. If they split 50-50, that's $50 tn for GMI. Assuming they could substitute 1MM tpa of Falcondo's ore (about 25% of their production), that would bring another $100MM profit, or $50MM/yr to GMI at virtually no cost to GMI - could make a deal to use Falcondo's equipment that would otherwise be idled.
$50MM/yr in free cash flow could then be used to build their own leach facility. They would see similar cash flow even as production would be less as it would be limited by the ~1000 tpd acid production from the CdM mine. (so 1000 tpd vs 3000 tpd tolling arrangement). But mine life would triple if they leached. Without knowing capex, it's difficult to know if it would be better to take a 50-50 split with virtually no capex if Falcondo processed the ore or if it's better for GMI to fund significant capex upfront and get 3x more cash flow. I suspect the latter is the best option to maximize NPV.
But the best of all worlds would be to toll ore for a year or so until such time as GMI can build their leach facility. They would see cf from the tolling arrangement plus the significant cash flow from CdM so the leach facility could easily be self funded.
In a few years, GMI could be generating $150MM cf per year. Slap a typical 5x cf multiple and you get a $750MM mc company with no more dilution. That's about $7.50 per share target valuation.