Replies to post #120715 on Sarissa Resources Inc (SRSR)

[downsideup]

The word "bankable" in "bankable feasibility study"... actually does have meaning.

The cost of borrowing appears to be very well contained within others cost estimates. It seems you're not the first to have ever considered it.

And, we'll see what that looks like in numbers when they do publish a bankable feasibility study, anyway...

So...

As far as the wild card that they may finance with off-take agreements instead of bank borrowing ? How are you factoring in that element of... something like routine... in what Chinese state owned companies have been doing in funding their development efforts ?

[downsideup]

A far more relevant question is... what is the proper focus in thinking about optimally scaling the initial and future development efforts ?

The "assumption" of the effort having a particular scale, like 5K tpd, on which the future focused numbers are based... seems questionable, to me, particularly in light of the known factors that are clearly apparent already in the pace of global demand growth. Global growth in demand... seems it will require adding MORE than an additional 5K tpd in capacity... each year.

Three "site specific" issues probably matter, there...

One is the pace in and timing in step growth in demand... and properly synchronizing the additions of new capacity from new sites as that will be required to meet future demand growth.

One is obviously the more or less linear element in the comparative costs of production at one site versus competitors costs at other sites. And, then, that cost issue has to be judged relative to potential competitors costs... while still not ignoring that scaling issues in development will also influence the cost of production issues ? And then, operational costs are only one factor in investment... and they have to be considered in light of larger issues in the alternative uses of capital in different investment scenarios.

The larger factor in decision, still, is likely to be a proper competitive comparison in the Capex requirements when considering the necessary scale of future development, given what is required in the pace in expansion of future production... as future demand continues growth on trend.

The sheer scale of Nemegosenda's potential dictates that the MARKET SCALE issues will likely be what dominates some elements in the investment decisions, with a focus on minimizing Capex. If the costs are comparable... it still makes more sense to spend WAY less $ on developing a larger single resource that minimizes the future need for duplicative capital expenditures while meeting the requirement in capacity, rather than spending way more capital to get... basically the same capacity.

I'd add a fourth element in the generally still unstated bits in the market environment...

We should consider the recent imposition of the mining taxes in Brazil... which haven't yet begun to be considered as an element in the competitive analysis in niobium ? There's still been only a minor discussion of the "subsidization" of the Brazilian industry as that relates to Brazilian competitors masking and socializing their true cost of production. Given that seems a vastly larger factor in niobium's near monopoly market... than it is in mining iron, where we see Brazil addressing billions in unpaid tax liabilities dating from 2006 ? Seems pretty odd that there's been so little discussion of it.

I don't expect that Brazilian competitors are going to change their disclosure to make it easier for us to compute valid cost comparisons... but, they've sold 15% of the largest operation to China... so, I expect China isn't baffled by any of that now ?

And, still, the development of the tax issues now clearly begins to have them externalizing that cost component anyway... making it far more transparent.

We don't need to know what the "subsidization" issue looks like from inside Brazil... because now we can see it being addressed and isolated in the externality of the new tax structure...

Bottom line... it looks like CBMM's recognition of those costs will be going up by the factor in the mining tax... and that may well be an issue that decides the tipping of the scales in terms of the competition, at least when it comes to future development of additional capacity to meet future demand growth.

China will end up owning a much larger percentage interest in Nemegosenda than they own of CBMM now... and they'll be getting more while paying a whole lot less for it... which means their interest in meeting their own future demand growth will likely be modified in its focus by that same difference factor, as well as by basic cost issues, and shifting taxes driving investment decisions ?