RE: RE: RE: RE: RE: Largo NEWS. ND resource increaHi Ank.
One has to keep in mind that Mactung is an underground mine (although there is a large lower grade reserve that can be mined open pit to greatly extend the mine life although it wasn't included in the BFS...) so the 1% wo3 grade that Leahy was talking about was for underground. Also note that at just over 1% they are looking at cash costs of $104/MTU when the current price is about $200/MTU. 1% is wont be break even, it will be very profitable for NTC at Mactung......
Northern Dancer is an open pit at 10X the throughput of Mactung so its an entirely different cost structure. ND would be looking at 20,000 tpd where Mactung plan is 2000tpd.
Adanac's lastest cost predictions in October 2008 (with $90/bbl oil price used) generating their own power was about $9.20/lb Moly and with a grade of about .08% for the first 5 years (at 83% recovery) they get about 1.46lbs moly per tonne so that would work out to $13.45 per tonne all in cash costs.
I'm using $15/tonne for ND and Oil prices are half of what they using for pricing. So if we go to even $35/tonne ore value and $15/tonne cash costs you have $20/tonne net profit on 20,000tpd thats $146MM/yr profit at current metal prices. Even with 400 million share outstanding (double the current level) $146MM/yr profit would be 36 cents per share earnings x 6X EPS multiple gives $2.16 share price.....
Here is a quick breakdown. At the .21% wo3 equivalent they get equivalent of 4.62 lbs tungten and say 80% recovery they would get 3.7 lbs recoverable wo3 equivalent. If cash costs are $15/tonne and they get 3.7lbs metal their cash costs are about $4 per lb of recoverable tungsten. Thats open pit costs on low grade. For Mactung they are looking at $104/mtu cash costs or $10.40/kg which is about $4.70 per lb recoverable tungsten on high grade.
So Northern Dancer at $4 /lb with a grade of .21% and Mactung a cost of $4.70/lb at a grade of 1.1%..... thats the difference between underground and open pit. 5X higher grade and still higher cost per lb..... But. ND will have a capex of probably 2.5X that of Mactung. That right there puts them way out in front in terms of mine startup. Mactung is also much further advanced (BFS compared to not even prefeasibility with ND)
Anyways, the purpose of this is to show that Northern Dancer is an exceptional deposit and will get produced, it is economic IMO. The only thing is they are behind a couple other stocks on the production timeline. (NTC OTL and Dragon Cap.(old Tiberon)) NTC's Mactung is a sure thing to production because the world needs that supply in the shorter term where LGO's ND isn't needed for several more years (probably 2014) so its just a matter of waiting it out.
lurk