This morning Arianne Phosphate announced that it has received back the results from an engineering study commissioned to review and update projected CapEx for its Lac à Paul phosphate project in Quebec, Canada. The study places the estimated cost at US$1.55B for the project. Of note, that CapEx also includes $300M worth of necessary infrastructure additions including an electricity transmission line from dam to site and, a north shore ship-loading facility on the Saguenay River.
Arianne’s last publicly available number was in 2013 and showed a CapEx of just over $1.2B. Although the CapEx is roughly 30% higher than their last reported number, it is worth noting that 10 years have passed. Arguably, I believe, many market participants would have pegged their CapEx at $2B given what we have seen in recent years in regard to mine construction.
In speaking with Brian Ostroff, Arianne’s President, I will note that he is very happy with the number.
It is also important to point out that although the CapEx is up from the last report, it is disproportionate so when compared to the higher phosphate price ($213/t then vs. over $300/t now) and the positive benefit from the currency exchange ($1.05 then vs. $1.35 today). Although there are limitations on what the Company can say, I think that when all aspects are accounted for, the value of the project has been greatly enhanced.
As I have said, if you are looking to get into the battery space, phosphate is a very good way to do it and, at a much better valuation. Arianne sits atop the world’s largest greenfield resource and, it is fully permitted and shovel-ready. They have shown their phosphate to be capable of addressing the battery market as well as the agricultural market. Being in Canada, it will be an important source for the west as the race heats up to secure critical materials.
I own shares and the company is a blog sponsor.
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