- Joined
- 29 August 2006
- Posts
- 909
- Reactions
- 148
Re: MTN - Marathon Resources
It certainly is a factor and only one of many that need to be considered now and in the future.
With such high price targets being thrown around this thread it is important to analyse every company and project in a case by case study because every deposit is different. Simply comparing it to peers on an EV/lb basis who are in production already or still explorers should carry no weight imo.
The true cost of uranium mining can only be known once the ore body has been well delineated, grade distributions have been logged and the deposit geology is fully understood.
With underground mining, many cost implications flow from the determination of the geometry of the ore body, the ground conditions and the presence or lack of groundwater.
So far we have only been given MTN`s summary of the scoping study which has indicated that the way forward is with an underground mine.
I guess we will see the full study in 3 months with the resource upgrade.
In general, it is more difficult to predict the operating issues that will be encountered in an underground mine.
Poorer than anticipated ground conditions often leads to higher ground support, manpower, ventilation and equipment requirements for a given production rate, and the topology of the Flinders Ranges is far from ideal.
This can be accompanied by lower than expected ore grades due to excessive ore body dilution.
Dilution can then impact the revenue stream if the mill cannot process higher tonnage rates to compensate.
Proposed underground mines therefore deserve significant project scrutiny.
Cost correlations to grade are self explanatory, the lower the grade, the greater the volume of barren material which must be removed and processed so that the contained uranium can be extracted.
In MTN`s case thats about 45 million tonnes of ore to be processed and given a target of 1000 tonnes of U3O8 a year, the plant will have to process about 4,500 tonnes of ore body per day (24/7) to meet production targets (assuming an average grade of 0.06%)
As a comparison, the Sweetwater Mill in Wyoming is an acid leach facility with a 3,000 ton per day throughput capacity.
The mill was built at a cost of $359 million in todays dollars.
Dilution needs to be considered now before a $65 price target can be attached.
cheers
Firstly mmmmming, thank you for your efforts in putting this post together. Cheers.
I have a few retorts however, aimed at trying to accuartely determine what MTN should be valued at now, or into the future.
I will raise just one at this time, which has been glossed over a little, but will significantly effect your valuation. That is, dilution of the stock due to the need to raise funds, or take on a JV partner, in order to get to production. The company has stated that this will cost somewhere between $100 and $200m. (PDN took $92m at old prices) So, for just a start, can you please revise your valuation based on that? Or, if this should not be a factor, I would be happy for someone to refute this.
It certainly is a factor and only one of many that need to be considered now and in the future.
With such high price targets being thrown around this thread it is important to analyse every company and project in a case by case study because every deposit is different. Simply comparing it to peers on an EV/lb basis who are in production already or still explorers should carry no weight imo.
The true cost of uranium mining can only be known once the ore body has been well delineated, grade distributions have been logged and the deposit geology is fully understood.
With underground mining, many cost implications flow from the determination of the geometry of the ore body, the ground conditions and the presence or lack of groundwater.
So far we have only been given MTN`s summary of the scoping study which has indicated that the way forward is with an underground mine.
I guess we will see the full study in 3 months with the resource upgrade.
In general, it is more difficult to predict the operating issues that will be encountered in an underground mine.
Poorer than anticipated ground conditions often leads to higher ground support, manpower, ventilation and equipment requirements for a given production rate, and the topology of the Flinders Ranges is far from ideal.
This can be accompanied by lower than expected ore grades due to excessive ore body dilution.
Dilution can then impact the revenue stream if the mill cannot process higher tonnage rates to compensate.
Proposed underground mines therefore deserve significant project scrutiny.
Cost correlations to grade are self explanatory, the lower the grade, the greater the volume of barren material which must be removed and processed so that the contained uranium can be extracted.
In MTN`s case thats about 45 million tonnes of ore to be processed and given a target of 1000 tonnes of U3O8 a year, the plant will have to process about 4,500 tonnes of ore body per day (24/7) to meet production targets (assuming an average grade of 0.06%)
As a comparison, the Sweetwater Mill in Wyoming is an acid leach facility with a 3,000 ton per day throughput capacity.
The mill was built at a cost of $359 million in todays dollars.
Dilution needs to be considered now before a $65 price target can be attached.
cheers
