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The base case assumes that the long term price of fluorspar is US$500.00 per tonne supported by long term demand and stable prices of Fluorspar Acid Grade, Filtercake less that 5 ppm As, ex-Tampico, Mexico over the last 18 months at approximately US$500-$550 per tonne as quoted in Industrial Minerals from July 4, 2011 to January 21, 2013. The base case also assumes that consumption grows annually and the cash operating cost for producing fluorspar will be $231.69 per tonne of concentrate produced. The table below summarizes the total average annual operating costs associated with the anticipated production of 131,000 TPA of fluorspar concentrate:
--------------------------------------------------------------------------------------------------------------------------------------------------------Summary of Annual Operating Costs (in Millions)--------------------------------------------------------------------------------------------------------------------------------------------------------- Mining 17.3----------------------------------------------------------------------------- Processing 7.2----------------------------------------------------------------------------- Site Services 3.1----------------------------------------------------------------------------- General & Administration 2.7----------------------------------------------------------------------------Total Operating Costs 30.3--------------------------------------------------------------------------------------------------------------------------------------------------------
Several factors contribute to the projected low operating cost including:
-- High grade ore-- High recoveries-- Existing Infrastructure and historical operations-- Close proximity to tide water-- Access to suitable process water-- Local community and Provincial Government support
The table below summarizes the base case sensitivity analysis:
BASE CASE SENSITIVITY ANALYSIS-------------------------------------------------------------------------------------------------------------------------------------------------------- NPV Millions (C$) @ NPV Millions (C$) @Parameter Price (US$/T Conc.) 7.5% (Pre-Tax) 5% (Pre-Tax)--------------------------------------------------------------------------------------------------------------------------------------------------------+20% 600 175.4 240.4----------------------------------------------------------------------------+10% 550 128.2 182.4----------------------------------------------------------------------------Base Case 500 81.1 124.4-----------------------------------------------------------------------------10% 450 34.0 66.4-----------------------------------------------------------------------------20% 400 (13.1) 8.5--------------------------------------------------------------------------------------------------------------------------------------------------------
