Feasibility Study Highlights 1) "The Power Plant Trade-off Study determined the fuel source to be used within the Project. Although liquefied natural gas (LNG) indicated a possible cost saving to the mine operating expenses over the long term, Arctic diesel fuel was recommended based on a lower initial capital cost, simpler storage tank requirements, and diesel's status as a proven technology used in the area."
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Tetra Tech acknowledges the facts: LNG is unproven technology for both mining and Arctic conditions. And LNG can be very expensive to set up, with regasification and storage tank requirements.
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2) "The Cape Size vessels available on the world market do not have hull strengths sufficient to handle heavy arctic ice and will operate only during the regulated 60-day ice-free shipping window. Due to the size and availability of these vessels they will transport the bulk of the concentrate during the summer months. Additional ice class vessels, however, will also be utilized to extend the shipping window early and later in the season from approximately June to December."
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Tetra Tech confirms the facts: The ice-free shipping season for Roche Bay is only 60 days. So the ships that usually ship iron ore, Cape Size vessels, can only be used from August 20th to October 20th. Ice class Cape Size vessels do not exist on the world market. Smaller ice class vessels, shipping around 35,000 tonnes per load, can be used from October to December, but that adds an additional $25 per tonne in shipping costs for a China-bound load.
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3) "No royalties or product insurance costs were included."
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The pre-tax NPV model doesn't include the 6% Roche Bay plc royalty on concentrate production. The post-tax NPV must be ugly.
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4) "The 28-month project construction timeline assumes commencement of field activity in August 2015 and mechanical completion in November 2017"
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Mechanical completion in November 2017 means the first cape size shipment of ore in August 2018. Tetra Tech tells the truth: iron ore production from Roche Bay will come in late 2017 at the earliest. All the chatter by AXI management about early start-up production in 2014/15 turns out to be nonsense.