RE:RE:RE:RE:RE:RE:RE:Looking for High Grade Bloomfield,
I am glad to see you are confident in IVN implementation of the 4+4 Mtpa scenario. So you do agree that IVN will be able to sort out the logistics to get those 2 mines up and running. Now add the understanding that increasing the output of those mines is more or less an simple increase in initial capital expense (more drills, ore trucks, bigger vs. smaller mill components, etc) and mine design logistics (6 rooms instead of 4 etc), and you will see that it isn’t a big deal to increase to 6+6 if IVN has the money to do so. Granted, one bottleneck in the DRC may be power, but IVN is addressing that and I believe they have already increased power generation in the region. So, since you are confident in 4+4 and RF and IVN, then you should be almost as confident in the 6+6 Mtpa. A more rigorous risk assessment method is to just introduce an increased risk factor into your 6+6 calculations instead of dismissing the scenario altogether
I agree with your assessment that 16.052 billion lbs of total recovered/payable metal is the current total mine output. Nice to finally see your added admission that “16 billion lbs of metal is still plenty of high grade copper” after all the grief you have given this board for calling this a high grade copper mine.
bloomfield18 wrote: Going Deeper,
…
You are correct that you could drop the head grade, currently 4.68%, to something more modest, and thereby increase Payable Metal. You can drop it all the way to the marginal cost of production. However, that may do very little to improve after tax undiscounted cash flow, currently $17.114 billion. In fact, it may go down. It would also lengthen the payback period for CAPEX, and delay shareholder profits. There is a balance point, where dropping head grade no longer benefits cash flow. All of these mining scenarios seek to optimize head grade with cash flow. So reducing head grade isn't such a reasonable option.
That's why any increase in Payable (Recovered) Metal, at the CURRENT head grade of 4.68% is so important. Zero increase would be a huge disappointment. 25 to 30% over the Nov 2016 PEA, or 4 to 5 billion lbs copper, would be very favourable for shareholders. 50%, or 8 billion lbs would knock it out of the park. In this case, NPV is improving because a genuine store of value, additional high grade copper ore has been uncovered in the course of exploration.
These preceding paragraphs are disingenuous and/or you couldn’t even follow my reply. Your original argument (see below) was that you expect to see an increase in “Total Recovered Metal” associated with increased Mtpa. The sole purpose of my reply was to tell you that you are wrong and I tried to explain it as simply as possible. If you didn’t understand, then ask more questions. Conversely, if you think that I am wrong, then simply address my points so we can debate them.
bloomfield18 wrote: Going Deeper,
I should have been more specific. I'm literally referring to cash money paid for copper, not resource statistics. You'll find this in the 8 Mtpa mining scenario. Looking at the June resource update (Table 24-12, page 489, Mining Production Statistics), you'll find the heading "Payable Metal" in millions of lbs. If you add up all the years, it comes to just over 16 billion lbs combined Kamoa and Kakula for the entire life of mine.
You can also see this in Table 24-18, page 495, Processing Production Schedule. Under the heading "Total Recovered Metal", this is 16.052 billion lbs for the life of mine. This is for the entire project, Kamoa and Kakula combined.
In the 6+6 scenario, I'm looking to how much this value increases. That will provide the percentage increase in actual ORE. You don't get paid for resource, only that portion of the resource which makes head grade cut as mill feed.
To re-iterate, there should be zero increase in the “Total Recovered Metal” resource under the 6+6 mine scenario if IVN uses the same resource model as the 4+4 scenario (and assuming metal percentage recoveries in the circuit don’t change I guess). Increased Mtpa is just the logistics of putting more ore through the mill. To get more lbs of copper, the extent of the mined resource would need to change, which would necessitate a lowering of head grade, since presumably they are already taking the highest grade ore.