Importance of low stripping ratios (part 2)This is a table I made to compare head grade, stripping ratios, opex and capex of different graphite projects having already at least a PEA. (ranked from lowest cash cost per tonne of graphite to highest).
| Company | Head Grade (% cg) | Stripping Ratio | Annual production (tonnes) | Cash cost per tonne | Capital Expenditures
(M$) |
Mason Graphite
| 17,2 | 0,76 | 50.000 | 440 | 135 |
Focus Graphite
| 14,8 | 1,80 | 44.200 | 500 | 165 |
| Energizer Resources | 8,5 | 1,65 | 84.000 | 585 | 162 |
| Northern Graphite | 1,7 | 0,50 | 40.000 | 675 | 135 |
From quickly reading this table, we could make the following observations :
1-Indeed, the projects with the highest head grade show the lowest cash costs per tonne of graphite produced. So head grade may indeed be the most important determining factor of operating production costs.
2- A project with very low head grade (norhern graphite at 1,7% cg) is nonetheless still economically viable, most probably due to its very low waste to ore ratio (0,50 : 1). So low stripping ratio could partially offset the low grade of a graphite deposit. I suspect that without its low stripping ratio, northerngraphite low grade deposit would result in a non economically viable project.
3-the table shows that projects with highest stripping ratios need also the highest capital expenditures (is it a coincidence ?) Mason Graphite and Norhtern graphite with their low stripping ratios (0,76 : 1 and 0,50 : 1 respectively) need only 135 million $ Capex compared to the high stripping ratio of Focus graphite (1,80 : 1) which needs 165M$ of capex. (Note that I didnt include energizer in this comparison because the annual production is a lot higher and thus incomparable to the other projects).
Of course CAPEX determining factors are numerous (location of the project, head grade,...etc), but it seems low stripping ratios play an important role here. could more knowledheable members iin the mining sector confirm if it is indeed the case for mining projects ? and if so why is that ? does for example high waste to ore ratio require more expensive sophisticated machinery ?....
does low stripping ratios affect more CAPEX than OPEX ? or there is no relation ?
4- all the aforementioned projects show very high comparable Capex figures (only 20% difference between the highest and lowest capex), but show a larger difference between their OPEX (more than 50% difference between the lowest and highest costs of production per tonne).
It is true that low OPEX projects (e.g Mason graphite, 440$ per tonne) have a wide margin advantage over high OPEX projects (e.g Northern graphite, 675$ per tonne), but with both having nice margins anyway (price of graphite per tonne 1500$), does it matter that much for investors in the context of both requiring high capital expenditures and are unable to secure financing due to this ?
to be continued,
Waiting for your valuable comments,
thanks