Higher commodity prices and changes to the metallurgical processes have significantly improved the economics of
A recent feasibility study places the internal rate of return at 23.6%, up from the 16.6% estimated under an interim feasibility study completed earlier this year. Likewise, the after-tax net present value (at a 7.5% discount) has more than doubled to US$281 million. Projected operating cash flow is up about 50% to US$73 million over its first five years.
The improved economics shorten the payback period by just short of a year to 3.9 years.
The study is based on a higher, but still conservative, long-term price assumption of US$100 per metric tonne unit (mtu) of tungsten; that translates into a price of US$150-160 per tonne of ammonium paratungstate (APT), the most widely traded intermediate tungsten product.
Tiberon CEO Mario Caron says the pricing assumption does not reflect the off-take agreement arranged with Osram Sylvania earlier this year. That deal, which will see Sylvania buy at least 44% of Nui Phao’s tungsten output over the first five years, will track the current commodity prices at the time of production. Sylvania also has a one-time option to take all of Nui Phao’s tungsten production.
Tiberon has a similar memorandum of understanding with Belgium’s Sidech to cover all of the project’s bismuth output, and is negotiating a deal to cover acid-grade fluorspar production.
Plugging recent commodity prices of US$285 per MTU of APT, US$175 per tonne of fluorspar, and US$3.75 per lb. of bismuth into the financial model pushes the rate of return to 39% and trims the payback period to 2.5 years. At these prices, the after-tax net present value (at a 7.5% discount) of Tiberon’s stake soars to $607 million.
The improved financials also benefit from higher tungsten recoveries, which have climbed by 7%, to 66%, and bismuth recoveries that have doubled to 62%. Recovery rates for fluorspar, copper, and gold are little-changed.
The project dimensions remain similar to those previously outlined, including annual throughput at 3.5 million tonnes of ore annually. However, the stripping ratio slides by about 7% to 1.67-to-1, owing to the inclusion of more low-grade ore.
In the end, Nui Phao’s planned open pit is expected to produce 76,000 tonnes of tungsten trioxide (up 8.5% from the previous plan) and 3.5 million tonnes of acid-grade fluorspar concentrate (off about 4%). Bismuth production is expected to double to 32,000 tonnes over a mine life of 16.3 years. The drop in fluorspar production is aimed at ensuring that the quality of the final product meets market requirements.
Total operating costs per tonne of ore have fallen by about US33, to US$7.59, thanks mostly to a reduction in reagent use.
With the improved recoveries, lower operating costs, and higher commodity prices, proven and probable reserves have been revised upwards to 55.7 million tonnes running 0.21% tungsten, 8.1% fluorspar, 0.185% copper, 0.21 gram gold and 0.09% bismuth.
Accompanying the project’s improvements is a 9% higher price tag of US$229.8 million. That rise is mostly a reflection of increased equipment requirements to facilitate the higher recoveries and higher costs for structural steel and copper.
The project is fully permitted, having recently received its mining licence. The licence extends over nearly 1 sq. km over the known reserves and is valid for 30 years.
The project’s environmental impact assessment was approved earlier this year. Plans call for startup and commissioning in the second half of 2007.
Two Vietnamese government partners hold the balance of the project.
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