RE:PFS - engineering but also finacial analysis Thanks Margin
Margin321 wrote: Is there not a major financial component to the PFS.
They have to identify capital required and how they will access capital and the cost of capital.
They have to come up with profit analysis and that requires cost of capital.
Success of a pre-production resource company requires world class resource, good jurisdiction and infrastructure, and ready access to capital. All that has to be laid out to see if moving forward is feasible.
1. Huge resource, high quality resource (low iron), totally favorable for efficient surface mine with very little overburden. All proven by past and especially 2022 drilling. CHECK.
2. Canada is great mining jurisdiction. They have alignment with local communities built over years. Location is good in terms of North America supply chain with EV and battery productiondevloping in province and adjacent areas of US. Infrastructure not optimal. However Infrastructure is in process. Timing of power on-line and road upgrade has to be clarified. CHECK pending clarification of timeimg of infrastructure upgrades.
3. Financial Projections incomplete. Margins will be high and all aspects of operation from mining to spudomene concentrate production to LiOH production will project as highly profitable given demand for LI and current and likely future pricing. That part will get a CHECK. However access to capital and cost of capital are INCOMPLETE. Without that no profit projections can be made and it remains unclear if the project is feasible. What role will stock raises, debt, joint ventures, off take agreements, or sale of part or all of the company play in ensuring that project is feasible. Especially given current constrained status of capital markets.
Seems to me that a lot of the PFS will rely on data that can be assembled quite easily. (parts 1 and 2 and first secton of part 3). However the nitty gritty of how they will get capital and how much that will cost may actually be the biggest component where a lot more work will be required. That may be why they have extended timeline into spring 2023. They will have to analyze the feasibility of stage one (mining and producing spudomene concentrate )separately. That project will have to be feasible on its own. The second phase (LiOH production) will depend somewhat on success of phase 1 which will supply cash flow from operations tohelp fund the chemical production facility and start up. .