Block Cave Cost Estimate - GGP 25% Share $207m
Posted: Fri Jul 01, 2022 7:52 am
Of note, in that Fitch Solutions research (I just published) is the Oz minerals Carrapateena example:
As a direct comparison of the costs associated with block caving (often hammed up as some major problem by Biggles et al) take the Oz minerals Carrapateena project - (which I often quote ) - as this project is extremely analogous to Havieron: It’s a deep, underground mine, under circa 400m cover, with fast start mine, plus a later 2x block caves (copper with gold)… where capex is US$ 1.37bn - total for the block cave expansion.
Now key is that same as format as Havieron) . Ie Early production starter mine first then block-cave follows later. But ALSO key is as a virgin greenfield site they were required to build : c57km new access road , two deep 400m declines ( access + conveyor decline ) , new airport, new dedicated processing facility, full mine build out , new accommodation village , even the power generation plants etc etc etc all for $700m and $1,37bn...
That investment takes the Carrapateena project to 12mt per annum... (sound familiar ? )
NOW back to Havieron : say we’ve 25% of $1.2v - 1.3bn USD (GGP share inclusive of inflation) to find (given how much infrastructure already exists at Telfer, it's possibly less ) and that $370m will have already been spent, by then on the fast start SLOS mine:
That leaves ( less than ) US $830bn x 0.25 or $207m net to GGP (after the $73m for fast start mine) to get to full block cave production ie 500-700koz per year for 20 years... Here's the numbers:
4MT/year for 15 years at 2.5g/t from the fast start high grade SLOS mine = 322koz
10Mt/year at 0.79 g/t from the Block Cave / Sub Level Cave = 254koz
= Havieron Grand total = 576 koz / year
By my reckoning that’s 144 Koz net to GGP, which means, at $1800 gold, $259m revenue, they could pay off the block/sub level cave debt of £207m out just 1.5 to 2 year’s mine revenues and still have some 18- 25 years production
BUT 144koz net @ $2500 gold = $360m annually. less that 1 year revenue
Havieorn will become a money making machine... And these figures are not fantasy they are based on REAL world example below:
Caveat is that Carrapateena's SUB LEVEL Cave starter mine cost $700m in 2017 vs SLOS Havieron mine costing less @ $370m (so overall the there was more money spent 'up front' at Carrapateena.. but they need much more infrastructure as it was a virgin greenfield location.
References:
https://www.asx.com.au/asxpdf/20200623/ ... yz3m26.pdf
https://www.nsenergybusiness.com/news/o ... expansion/
https://www.mining-technology.com/news/ ... n-project/
"OZ Minerals managing director and CEO Andrew Cole said: “The integration and acceleration of the Block Cave Expansion allows progressive de-risking of the Carrapateena Province in its sub level cave ramp-up to 4.7 to 5.0Mtpa from 2023 and transition from sub level cave to block cave, while preserving optionality at future major capital milestone decisions over the coming years.
“The accelerated program could bring forward commencement of block cave production by circa six months.”
As a direct comparison of the costs associated with block caving (often hammed up as some major problem by Biggles et al) take the Oz minerals Carrapateena project - (which I often quote ) - as this project is extremely analogous to Havieron: It’s a deep, underground mine, under circa 400m cover, with fast start mine, plus a later 2x block caves (copper with gold)… where capex is US$ 1.37bn - total for the block cave expansion.
Now key is that same as format as Havieron) . Ie Early production starter mine first then block-cave follows later. But ALSO key is as a virgin greenfield site they were required to build : c57km new access road , two deep 400m declines ( access + conveyor decline ) , new airport, new dedicated processing facility, full mine build out , new accommodation village , even the power generation plants etc etc etc all for $700m and $1,37bn...
That investment takes the Carrapateena project to 12mt per annum... (sound familiar ? )
NOW back to Havieron : say we’ve 25% of $1.2v - 1.3bn USD (GGP share inclusive of inflation) to find (given how much infrastructure already exists at Telfer, it's possibly less ) and that $370m will have already been spent, by then on the fast start SLOS mine:
That leaves ( less than ) US $830bn x 0.25 or $207m net to GGP (after the $73m for fast start mine) to get to full block cave production ie 500-700koz per year for 20 years... Here's the numbers:
4MT/year for 15 years at 2.5g/t from the fast start high grade SLOS mine = 322koz
10Mt/year at 0.79 g/t from the Block Cave / Sub Level Cave = 254koz
= Havieron Grand total = 576 koz / year
By my reckoning that’s 144 Koz net to GGP, which means, at $1800 gold, $259m revenue, they could pay off the block/sub level cave debt of £207m out just 1.5 to 2 year’s mine revenues and still have some 18- 25 years production
BUT 144koz net @ $2500 gold = $360m annually. less that 1 year revenue
Havieorn will become a money making machine... And these figures are not fantasy they are based on REAL world example below:
Caveat is that Carrapateena's SUB LEVEL Cave starter mine cost $700m in 2017 vs SLOS Havieron mine costing less @ $370m (so overall the there was more money spent 'up front' at Carrapateena.. but they need much more infrastructure as it was a virgin greenfield location.
References:
https://www.asx.com.au/asxpdf/20200623/ ... yz3m26.pdf
https://www.nsenergybusiness.com/news/o ... expansion/
https://www.mining-technology.com/news/ ... n-project/
"OZ Minerals managing director and CEO Andrew Cole said: “The integration and acceleration of the Block Cave Expansion allows progressive de-risking of the Carrapateena Province in its sub level cave ramp-up to 4.7 to 5.0Mtpa from 2023 and transition from sub level cave to block cave, while preserving optionality at future major capital milestone decisions over the coming years.
“The accelerated program could bring forward commencement of block cave production by circa six months.”
