Anything More Than 40 Years Project Life Is Too LongEasy to figure it out from that starting point:
2,233,433,000 Tonnes (Indicated + Inferred) / 40 Years / 365 Days = 152 KT per day. This is an increase from the 114 KT per day in the 2013 PEA.
I am tempted to scale up capital costs by a factor of 152/114, but Cliffs put so much padding into the capital costs of the 2013 PEA that scaling would merely compound this error.
I suspect that capital costs will increase in the upcoming PEA revision, but only slightly. This will be in stark contracst to the revenue side of the equation which should be really impressive.
152 KT per day at an initial (high) grade of about .15% and an 82% recovery delivers production of 412,000 pounds of nickel per day. We will not know the breakeven price of nickel until the revised PEA is published, but we can still work with incremental values to say that for every $1 increase in the price of nickel, we should see an additional 95 cents on the bottom line.
This calculates as a cashflow before taxes of 95% (payable) X $1 X 412,000 = $391,000 per day or $141 M per year.
My assumption is for a breakeven nickel price of about $4.50 per pound. So at todays price of nickel, the estimate becomes ($6.70- $4.50) X $141M = $314 M per year. Works out to something in the order of a 5 year payback, depending on the depreciation schedule used for taxes.