Economic Feasibility?
Average Total Cash Mine Cost (2, 3) $/Ton $121.17
Average Coal Price (3) $/Ton $170.58
2: Excludes income tax, financing cost, and working capital.
3: Average is over the life of the Property
"raw coal produced by at the Rex No. 1 Mine will
be sold in the metallurgical alloy market through a third party producer, for $90.00 per clean ton
washed at a 1.40 specific gravity until completion of the preparation plant.
Once the preparation plant is in full operation in the third quarter of 2012, the product
quality is anticipated to sell at prevailing market prices for metallurgical alloy coal. Currently,
the domestic and international export market sales price, FOB delivered to the smelter, ranges
from $160 to $170 per ton depending on the mineral content to the fixed carbon content. Based
on the quality described in Item 13, the revenue for the MCoal clean product would average $125
per ton FOB the shipping point in the current market, assuming a maximum $40 per ton
transportation charge from a train loadout to the smelter."
Table 21-1: Rex Mines Production Cost Schedule
Year/ Tons Produced / Direct Costs ($/ton) / Variable Costs ($/ton) / Total Cash Costs ($/ton)
2012 71,810 $38.97 $40.73 $79.69
2013 369,265 $36.84 $34.13 $70.97
2014 450,395 $40.69 $35.71 $76.40
2015 647,442 $42.73 $39.98 $82.71
2016 634,381 $44.76 $41.73 $86.49
2017 618,210 $47.04 $43.54 $90.58
2018 627,484 $48.90 $44.90 $93.80
2019 636,450 $49.90 $48.12 $98.02
2020 684,560 $48.12 $55.07 $103.19
.... through 2034 total avg to $120.27
So let's see if I get this right? Please comment.
Mine production costs this year are expected to be around 80$/t (according to the table). These costs do not include income taxes, repayments to Sandstorm or transportation. Up until Sept when the wash plant is completed the company will receive 90$/t for finished, washed met coal. Once the company can wash its own coal it is expecting to get market value 160-170$/t.
They cite 40$/t as transportation costs. For Rosa my understanding is that there is a local customer and the transpo costs are not so high? Anyone have any insight on the potential shipping costs for Rex? The technical report does not mention anything regarding the sale of Rex coal as thermal, given a weakened met market (as was mentioned in a post by Resource Miner). Is that an oversight, an impossibility or unrealistic?