OZL 1.26% $14.86 oz minerals limited

avebury is likely to produce a profit

  1. 13,594 Posts.
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    at the moment the cost production at Avebury is about US$11/lb

    quite high but remember it is in start up phase
    in the quarterly ozl says
    "total cash cost may be expected to decline when this operation reaches full capacity"

    I would suggest that the cost will drop considerably

    I was just listening to this presentation on Avebury at the the Diggers and dealers

    http://www.brr.com.au/event/AGM/748/12407/wmp/2oo0dqauy8/7limozgy8m

    on this presentation they say some interesting things about the deposits

    the motto at aligiance the prior owners was "nothing but nickel"
    Apparently the avebury rock has some of the highest concentrations of nickel in the world
    the mines "20%-plus nickel concentrates define a new
    global benchmark"

    the actual cost of production are tipped to be about US$2.20/lb
    about 50% less than nickel produced in Kambalda in wa

    if this is the case this mine would be one of the lowest cost producers in the world

    so if they can bring costs down this project is likely to be very profitable

    lets do a rough back of the envelop calculation
    resources = 172,000 tonnes
    reserves = 56,100 tonnes /123,644,400 lbs
    discounted 20%
    103,037,000 lbs



    4000 tonnes per quarter
    16,000 tonnes per year
    35,264,000 lbs per year

    ni price = $4.50
    cost production $2.50
    profit $2

    Profit $70,528,000

    profits from sepon are likely to offset loses from century

    Now just add in another $70m
    I'd say Prom Hill is likely to produce a profit as well

    we could well be in the black by the end of the year

    a lot depends on whether other cash burning activities are put on the backburner like exploration and development at Dugald River and Martabe


 
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