So we know from RNS that West Kytlim is planned for eventual scale up to 2tons a year, probably to show what it is worth to a new owner.
We know there is a ready to go plan for Monchetundra involving SinoSteel for around 4tons (approx 125Koz) a year. Alexei Churakov gave a Kommersant interview in January stating likely EBITDA of $250m from this.
What would happen to share price upon resumption if a similar scale up plan has been devised for Monchetundra to take advantage of the 15Moz resource with flank approval granted?
No point digging out 150kz a year, you’d be there 100 years!
It would make more sense to see them aim higher, maybe a plan for 780Koz so life of mine is around 18-20years. This will take a few years to achieve, but the low cost nature of extraction via open pit will mean new owners can start production by 2021, maybe 2022 at the latest.
Higher potential EBITDA – $1.5bn to $2bn a year means much higher company valuation.
Allow a hefty discount for building the bigger facility, probably around $1bn, you’d still be looking at $4-5bn to ensure you secured the asset that will generate $15-$20bn over less than 20 years.
(This is conservative as well – 15MOz at Pd price each year, less $325/Oz costs)
This may mean some investors need to be a little patient whilst the plans are drawn up. It doesn’t mean Eurasia will be activating the plans, think of it as a feasibility study.
It is very hard not to be optimistic about the future when you work out what this vast resource will yield.