Thread: BHP have sold Ravensthorpe

from Reuters........

Latest Key DevelopmentsBHP Billiton Limited Sees $3 Billion Charge For FY 2010 From Ravensthorpe Sale-DJ
10:06am EST
Dow Jones reported that BHP Billiton Limited said it will sell its Ravensthorpe nickel mine, but despite the sale the project will still cost the Company $3 billion. The Company said it recorded a $3.6 billion pre-tax impairment charge, which includes the capital expenditure cost, for the Ravensthorpe closure in the financial year ended June 30. BHP expects the sale to First Quantum to reverse the impairment charge by $630 million pre-tax, leaving a $3 billion charge to the Company.
First Quantum Minerals Limited Announces Acquisition Of Ravensthorpe Nickel Operation, Western Australia From BHP Billiton Limited

Tuesday, 8 Dec 2009 06:06pm EST
First Quantum Minerals Limited announced that it has entered into a binding agreement with BHP Billiton Limited to acquire the Ravensthorpe Nickel Operation in Western Australia for $340 million. The acquisition is expected to be finalized during the first quarter of 2010. Terms of the transaction were not disclosed.

Yep have already lodged an expression of interest. Heard it on first day driving to Norseman. Hopefully it will be a good thing.

Its going to have to be run tight tigh....

Nickel price is still lousy and Ravo was marginal when the price was $22 a lb.

Current nickel price is $7.58/lb, Rockys reward mine was producing Nickel for $4/lb and we got shut down Ravo IIRC was around $11/lb to produce nickel concentrate

I hope im wrong and it all works out for the best for the new owners. (it wouldnt be hard spending less money than BHP to mine and asset though....)

Originally Posted by Lucus

Its going to have to be run tight tigh....

Nickel price is still lousy and Ravo was marginal when the price was $22 a lb.

Current nickel price is $7.58/lb, Rockys reward mine was producing Nickel for $4/lb and we got shut down Ravo IIRC was around $11/lb to produce nickel concentrate

I hope im wrong and it all works out for the best for the new owners. (it wouldnt be hard spending less money than BHP to mine and asset though....)

Well there has been a lot of figures thrown around. The initial figure we were given to break even was $6000 US per tonne. Amazinglly when it got shut down BHP were sprouting we actually needed to be at $12000 US per tonne. At the time it was $11105 US per tonne. But it had been as low as $9000 US over the previous few months. Everyone did not think much of it as the break even price we were given was $6000 US per tonne. So go figure how had the break even cost suddenly doubled between Dec 08 and Jan 09. This was not just to recoup operating costs but also to recoup the $2.2 billion construction costs over the projected life of the mine. The new company that have bought it will have a lot less of an ongoing project recovery cost than BHP did. I would estimate they may be looking at $600 million capital maybe plus operating costs.
At present nickel is around $16700 per tonne. The issue with nickel and it is historical is that it cycles and every so often the bottom drops out of it. Most people still can not understand why a company like BHP could not ride it out for 6 - 12 months and let it stabilise. Seems like they just wanted the tax write off on the asset.
Even at the figures now of $7.50 odd lb = $16700 odd per tonne it is profitable on the high end figures BHP gave us. Lucas where did you get the $11 lb figure from? That would have made a $24640 US break even price and that would never be viable. At the quoted $12000 US per tone nickel would have to be around $5-35 lb to break even, At the original break even of $6000 US per tonne it would have been around $2-70 lb. On either calculation it would be profitable. Yours is the first I have heard of $11 lb being suggested.
The nickel price is not lousy, just it went to stupid prices for a while at around $53000 for a while. 5 years ago $16000 a tonne was considered very good prices and this is what Ray was modelled on, not the $53000 per tonne that occured after construction approval was given.

Cant wait to begin re-supplying out there. We were 1/2 way through doubling the size of our shed when it closed up.
All I can say is thank goodness for the high gold price...if i was to rely on nickel miners to buy our goods things would be very tight!

Originally Posted by nealo

Cant wait to begin re-supplying out there. We were 1/2 way through doubling the size of our shed when it closed up.
All I can say is thank goodness for the high gold price...if i was to rely on nickel miners to buy our goods things would be very tight!

Nealo,
Who do you work for? From my understanding it is going to be very tight out there. They are not even neccessarilly going to offer jobs to ex employees and will be no community assistance.
But heres hoping anyway.

Originally Posted by CraigE

The issue with nickel and it is historical is that it cycles and every so often the bottom drops out of it. Most people still can not understand why a company like BHP could not ride it out for 6 - 12 months and let it stabilise. Seems like they just wanted the tax write off on the asset.

BINGO!!!

Craig the $11/lb came from a meeting with BHP managment at Rockies Reward. Its was just after the shut of Ravo was announced.

The meeting was to put my employer at the time (BGC) mind at ease. Our production target was double, but half the fleet where off hired, sortly after that and then we where shut aprox 1 month later. (around mid july)

These figures may or may not hold water but they did come from BHP at the time.


(surely they wouldnt fudge figures to protect the share price would they..??)

either way i hope it picks up again. As you would know alot of people invested alot of $'s (and there futures) in Ravo.

What did the BHPBIO share price do after the announcement?

Craig

We manufactured wear plates for all of the chutes and hopper on site(Davies WearPlate Systems), plus we did alot of urgent fabrication and machining jobs, as well as CNC machining of components for the guys in utilities.
I must have sent out 50T of liners in the short time they were operating, and being so close we are the obvious supplier.

aaaaah how I miss going out there and enjoying a cuppuccino, beats standard minesite crib room coffee anyday