WKT 1.30% 39.0¢ walkabout resources ltd

Hi @Natos, I'll do my best. Yes you do get lower capital costs...

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    Hi @Natos, I'll do my best. Yes you do get lower capital costs and operating costs if you have higher grade. The advantage of having a premium in grade can be wiped out in terms of operating costs if you have to mine excessive waste and low grade to access the high grade (17.9 percent graphite). In more detail below.

    Without doubt the 17.9% reserve grade for Lindi is a plus, however I would caution that it doesn't allow enough for dilution as the domains as shown below are quite thin and mixing with lower grade domains and waste during blasting is a risk. That said, the reserve grade of 17.9 percent enables a lower cost plant to be built. All things being equal the capital cost for the plant at Lindi should be 55% of the cost of Epanko because KNL have to process 55% more ore to produce the same amount of concentrate - that's because the Epanko reserve grade of 9.9% compared to 17.9% at Lindi.

    The difficulty though isn't the capital cost. . To be more specific it is the mining operating costs associated with the overburden waste and lower grade ore. Refer to a cross section through the orebody obtained from the following link (https://www.asx.com.au/asxpdf/20161206/pdf/43dhxqs8cjyhx6.pdf). I have superimposed an inferred open pit boundary in red. Now given that it is only the high grade Domains of 7, 8 and 9 which are to provide plant feed for the reserve grade of 17.9 percent graphite (i.e. lower grade domains 1 and 2 shown in grey will presumably be stockpiled) I estimate the strip ratio to be 10 to 1. The mining costs per tonne of ore or waste moved should be between $5 and $7.50 per tonne - that includes grade control drilling, blasthole drilling, explosives, loading and hauling. If we adopt the $5 amount then the US$/t of ore mining cost should be 11 x $5 (10 tonnes of waste and one tonne of ore) = $55/t of ore at a reserve grade of 17.9% graphite. Now for every tonne of 99% concentrate you have to mine 5.5 tonnes of 17.9% ore. Accordingly the mining cost per tonne of 99% concentrate is $55 x 5.5 = $302.50. It's already exceeding the "On Mine Opex" of $282/t in concentrate (as published in the updated DFS announced on 9th March 2019) and doesn't allow for processing costs will be of the order of$130 per tonne of concentrate and G & A costs which will be of the order of $50 per tonne of concentrate . In comparison I ask you to refer to the second cross section below which is for Epanko where the updated Bankable Feasibility Study (published June 2017) lists the strip ratio as 0.4 to 1 - that is why Epanko's mining cost per tonne of concentrate is only $96 per tonne of concentrate (and that's using $7 per tonne mined).


    EPANKO cross section shown below.


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