RE:Would Massawa actually work?I found the +/- 300 page technical report on the Barrick site a little to much for me to read. I did go through some highlights.
- Cost to build the mine for Barrick is roughly 400 million.
- IRR at GP of $1200 is 25% (Waghion was around 15%)
- IRR at GP of 1400 is 37% (That looks pretty compelling)
I am going to make some potentially ignorant assumptions now. Assuming the cost of the plant for Barrick is 400 million, I would imagine TGZ could probably use existing infrastructure and build needed upgrades for 150-250 million. At the current GP that would be pretty compelling.
From what I can tell, Barrick has already sunk around 100 million into the feasibility studies.
Grade is quite high so transportation of ore with high grades would technically be cheaper. The project essentially pays no corporate taxes for 7 years after permitting (except for a 3% revenue royalty) and TGZ would be up and running far faster than Barrick building from scratch, after 7 years it's 25% tax on profits. The government will be heavily tax incentivized to see this project begin and will likely be incentized to build needed transportation infrastructure.
The challenge is Massawa is going to cost several hundred million and when your market cap is around 600 million that would represent a bold leap. So far I think Young has played this perfectly, I just do not think that Barrick is going to hand it over but it's almost Christmas and next week is Black Friday, maybe Barrick has a sale on this asset :-) .