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Royal Nickel Corp. RNKLF



GREY:RNKLF - Post by User

Comment by origamion Feb 21, 2017 4:07pm
219 Views
Post# 25873614

RE:RE:RE:Has anyone else done the capacity calculation? eoq

RE:RE:RE:Has anyone else done the capacity calculation? eoqorigami - (2/17/2017 3:08:28 PM)
RE:Has anyone else done the capacity calculation? eoq
107koz @ 2.5g/t
=====================================
factRbest - I was thinking both resources. One of the two resources will have to be under processed or the facility upgraded to meet the numbers that RNX is putting out.

By capacity I meant the tonnage capacity of the mill relative to the grade listed.
Using the top end of the grade est. of 2.65g/ton and 70K oz - BETA
Using the quoted grade 2.27g/ton and 60K oz per year - SKO(HBJ)

With 100% recovery assuming those are mine grades and not mill gades - then the capacity of the mill will need to be in excess of 1.5MTPA.
Any loss in recovery will require further capacity to achieve max output from both mines.

70K + 60K.
Which ever is reduced then it can be assumed that costs will increase.
Interestingly the 60K (SKO) and 30 to 40K (Beta) which is what they seem to be able to achieve to date fits the capacity at the stated grades.

As well, after the proven and probable which will last 3 years at 60K ounces per year is processed the grade drops to 2.27 from 2.6g/ton.

I hope RNX gives a more detailed analysis of this.
At first look this only makes sense if RNX has determined that Beta production will not be achieved.
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The numbers I posted was the output of the blended grade of SKO and Beta given full capacity of the mill.

More specifically
70k oz @ 2.65 g/t
60k oz @ 2.27 g/t
Avg Grade = 2.475 g/t
Mill capacity 1.2 mtpa @ 2.475 g/t = 106017 oz
 
Using the grade for the 2P numbers for SKO
70k oz @ 2.65 g/t
60k oz @ 2.60 g/t
Avg Grade = 2.627 g/t
Mill capacity 1.2 mtpa @ 2.627 g/t = 112586 oz
 
In either case, the mill capacity falls short (as you stated) at current grades and these grades would need to be recovered not mined.

To get 130k oz from a 1.2 mtpa mill we need an average recovered grade of 3.03 g/t which means RNC will need an average recovered grade of 3.4 g/t from Beta.

Looking at the Tolling Agreement alone (600ktpa) to achieve 70K oz they need an average recovered grade of 3.267 g/t. Mined grades would look more like
  • @95% = 3.439 g/t
  • @94% = 3.476 g/t
  • @93%=  3.513 g/t
That being said, any shortfall in capacity at Jubilee can be processed at the FMR Mill (Coolgardie, 80km away), where they are currently processing Beta. There is also the St. Ives (Goldfields) Lefroy Mill (4.7mtpa) which is about 15km away but according to Goldfields 2016 year end, it was near capacity (the Beta PEA stated that Beta ore would be processed here-???). Going forward mill capacity can be expanded (conference call) but this of course will require time and money. Also they stated they will be mining higher grade ore at Beta (3+ g/t - production update Jan 18, 2017).

As for the A$80M purchase price in the option, I think given the “expected” production of 60k oz per year at SKO (over the next 3+ years) at US$250/oz net, assuming US$1200 gold and US$950 aisc, plus the “expected” savings of A$7M and the cost of the A$4M tolling agreement (for 50% of the capacity) over the next 12 months, all things being equal going forward, the payback period could 'potentially' be a little over two and a half to three years. That still leaves us with a 3.7M oz compliant resource, 1000+ acres, and an expandable mill.

All that being said the fact remains (as you have stated numerous times) that RNC needs to get it together at Beta.

I hate dilution as much as you do for all the same reasons and its been painful for sure.
I also invested in this for Dumont but it would seem that management has every intention to make something of Beta and given that, as painful as more dilution will be, I think having an expandable mill and everything else that comes with this deal makes Beta mildly more palatable. They need to get the share price up and finance as much of this deal as possible (forward sell production at SKO similar to the Auramet deal with Beta).

Bottom line, this means getting their schit together at Beta sooner than later!

Hope everyone had a good long weekend!

All the best

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