Logistics DFS - CapEx/OpEx updatesThe release of the logistics DFS, awaited during May, will represent a major step forward in derisking of the NAU case. The logistics DFS is expected also to have updated information regarding CapEx and OpEx for the Kaunisvaara project. It is widely expected that the estimates for Kaunisvaara for CapEx and OpEx expressed in USD will be increased compared to the DFS from 2010.
UPDATE FOR CAPEX FOR THE KAUNISVAARA PROJECT
When the logistics DFS is released, NAU already has signed contracts for a major part of the estimated CapEx for the Kaunisvaara project. For important segments of CapEx the contracts looks like "turn-key contracts", for example for the USDm 293 contract with Metso for the processing plants (comparable to the USDm 297 estimate in the DFS from 2010). It's an important issue for NAU to "lock in" already today as much as possible of the CapEx estimate so there will be less risk left for cost overruns and thereby extra needs for financing. Soon the contract will be signed for building the buildings in the processing plant area. NAU has improved the design for the planned assets compared to the assumptions in the DFS from 2010. For example the no. of m2 for the buildings is reduced, which reduces CapEx.
Carnegie's estimate for CapEx for Kaunisvaara is USDm 770. The Capex in the DFS from 2010 was USDm 694, but according to USDSEK 8.125. Current USDSEK is about 6.40. NAU's coming update on CapEx is awaited according to USDSEK around today's spot exchange rate. I suppose Carnegies CapEx estimate is prudent, or maybe the outcome can be around USDm 750. In local currency (SEK) this represents savings compared to the CapEx level in the DFS from 2010. CapEx on NAU's hand for infrastructure and logistics is included in the referred estimates. CapEx per annual tonne capacity is widely used for comparing iron ore projects worldwide. USDm 750 and annual capacity for Kaunisvaara of 5 mill. wet tonnes per year implies CapEx of USD 150 per tonne annual capacity. The CapEx for BHP Billitons large expansion iron ore projects in Australia is estimated to USD 183/tonne. The corresponding data for Rio Tinto's big expansion plans in Australia is USD 131 per tonne new annual capacity. It's interesting to observe those levels of CapEx per tonne for standard 62 % Fe hematite compared to NAU's 69 % Fe magnetite, low in impurities (premium quality).
It's expected the Kaunisvaara project will be financed solely by loans when the earmarked proceeds from last year's share issue fully is paid out to finance the first stages of the CapEx.
In general new mining projects are plagued with increasing estimates for CapEx and OpEx. A "lock in" now of most of the Kaunisvaara CapEx will represent a major derisking of Kaunisvaara - and also relatively to many iron ore projects worldwide. NAU has per date done thoroughly planning for the whole CapEx process leading to commencement of mining scheduled by year end 2012 and first shipment scheduled to early 2013.