90,000 Liters of Fuel Storage at Plant 1Hello Janota,
I had a look at the licences and agree it seems that Verde can now hold 90 cubic meters of fuel at the Plant 1 site just outside Sao Gotardo. With 1 cubic meter equating to 1,000 litres, this translates into a permit to hold 90,000 litres of fuel onsite.
As Mr. Veloso confirmed at the April 7, 2021 Q&A session, Verde does not operate its own fleet of delivery vehicles, and I believe all excavating and loading equipment is contracted on an as needed basis. We also were informed of the lower cost of electricity that had been accomplished by connecting the Plant 1 site to the local grid and signing long term power contracts, so I am assuming there is not an onsite generator that requires the significant onging storage of fuel.
So, I am intrigued as to why the Company has sought, and now has obtained, licences to store 90,000 liters of fuel at the plant. Has the Comapny already installed storage tanks for the first 30,000 liter storage previously approved? Are they going ahead with plans to install the additional tanks to handle another 60,000 liters? If not, why did they apply for the second licence?
A 20 tonne load on a 4 axle truck will need 2 - 4 litres per KM depending on the road conditions. 90,000 litres would therefore fuel approximately 22,500 to 45,000 kms of 20 tonne truck delivery operations. Perhaps the Company has negotiated beneficial delivery rates with contractors/customers which include fueling their vehicles at the plant before they leave with a full load. Or maybe this is a way to keep the 10 to 20 trucks shuttling between the mine site and the processing plant running without the need to return to thier depot to refuel.
Who is accountable at Verde for the purchase of bulk fuels to fill these tanks and for disbursing the fuel to third party users (remember there are no Company owned vehicle which require fuel so we must be disbursing fuel to others). On what basis is the fuel disbursed and how is this tracked, managed and controlled? Given the significant increase in the Delivery and Freight expense category in the 2020 financial statements, this is an area that needs continued close scruitiny by the Board and management going forward.
Will Plant 2, at twice the capacity of Plant 1, need 180,000 litres of onsite fuel storage?
Great questions for the next Q&A after the Q1 numbers are released next month.
Cheers,
S