Goes along with prior post on NPV of assets at 10% dicount.
They will pay/issue $1.495 b with equity and another approx $915 mm for debt so total out is ~$2.415 b
-NPV is proved reserves @10% is $2.05 b plus say $110 mm is rough value of hedges not in reserves so value of proved properties in total say is $2.155 b
So they are paying $255 mm for upside (probable reserves, discount rate value below 10%, other) or 12% or of the deal.
so bob in your mind is that a good deal?
Anthony (salty two)
January 28, 2014 at 6:46 pm
Nevada! Business friendly, lots of open land, close by truck and rail to Tesla’s Fremont HQ to transport the finished batteries, very efficient if you were to build a lot of solar power to run the factory, and Lithium is actively mined in Nevada (we may have as much as 30M metric tonnes of lithium carbonate, which would be enough for more than 100 million Tesla Model S 85kWh batteries).
Disclaimer: I’ve invested some money in a Nevada-based Lithium mining company. I’m hopeful Musk builds the gigafactory on the west coast and uses domestic supplies of Lithium and other elements needed to create the batteries… and that the company’s stock goes up!
January 28, 2014 at 7:00 pm
Electric cars use around 1kg of lithium carbonate per kwh, so if your figure of 30 million tons is correct that should do for around 300 million Tesla’s, rounding them up to 100kwh each.
That is a higher figure than anything I have seen though;
At the McDermitt Caldera on the Oregon/Nevada border, Western Uranium Corporation are re-examining seven lenses of hectorite clay originally drilled by Chevron Resources.
Drilling at the most southerly site, the PCD lens, is confirming the tonnage and grade indicated by Chevron. This lens has a length of about 2 kms, a width of approximately one kilometer and a thickness of 100 metres under shallow overburden. Higher grade portions of the deposit grade over 0.35% Li and the cut off used in the reserve calculation is 0.275% Li.
Chevron reported that the total resource contained 23.9 billion lbs of carbonate – 2 million tonnes of Li and test work on recovery methods is currently being undertaken.
Hectorites are known to occur elsewhere in the western United States but no reserve data exist.’
2 million tons of lithium is about 10 million tons of lithium carbonate, so that would power 100 million or so Teslas...
Tesla factor: Recharging Nevada's lithium industry
Jason Hidalgo, RGJ 1:06 p.m. PDT April 7, 2014Tough race
"...Add Tesla's "vertical integration" approach to business — which emphasizes a more consolidated supply chain and sourcing as many components as possible domestically — and the prospects of local lithium production are looking up, according to CEO Walsh of Lithium Exploration Group....Walsh said in a statement. "I believe that Tesla will begin to acquire as much lithium supply as it can get its hands on in North America to further the vertical integration of … electrical vehicle production and insulate it from price volatility."
"...Anderson of TRU Group is a lot more skeptical about domestic lithium prospects....Only Western Lithium appears to be a viable project in Nevada at this point, Anderson said. At the same time, Anderson also described Western Lithium's plan to extract lithium from hectorite clay as opposed to the traditional brine ponds seen in Silver Peak and Chile as a long shot, at least from a cost-competitive standpoint.
Outside of Silver Peak, there are no other brine or salt lake opportunities in Nevada for lithium, he added."
Common Units representing limited partner interests filed on S-$ Registration statement
72,001,686 (1) nits equaling $1,494,934,911.45 (2)
(1) Represents the maximum number of Breitburn Energy Partners LP (“Breitburn”) common units estimated to be issuable upon the completion of the merger described herein.
(2) The proposed maximum aggregate offering price of the Breitburn common units was calculated based upon the market value of QR Energy, LP (“QRE”) common units (the securities to be cancelled in the merger) in accordance with Rules 457(c) and 457(f) under the Securities Act as follows: the product of (i) $20.43, the average of the high and low prices per QRE common unit as reported on the New York Stock Exchange on August 18, 2014 and (ii) 73,173,515, the estimated maximum number of QRE common units and QRE Class B units that may be exchanged for the merger consideration, including units reserved for issuance (on a net exercise basis, as applicable) under outstanding QRE equity awards.
Note: current ~120.5 mm outstanding bbep units
Bryan of Western Lithium confirmed that there were about 10 companies looking at lithium in Nevada just a few years ago. That number is way down since then, he said.
"I guess they didn't find the lithium," Bryan said....
..."Battery manufacturers still like to be close to the source," Bryan said. "The lithium battery is still one of the heavier components of an electric vehicle, so if you build it closer to the source, it's more economical because you can keep costs down."
Increased lithium demand from the Gigafactory — regardless of where it ends up — could also benefit Nevada. Still, Tesla's 2017 target means it will have to procure materials from international sources. Nevada does not have the critical mass in lithium production necessary to supply all of Tesla's needs or attract other industries, for that matter.
"The majority of lithium is still coming from overseas," Hill said. "Having lithium in the state provides benefit, but, in and of itself, not enough to cause companies to choose Nevada."
Despite his skepticism about a robust lithium industry in the United States, Anderson understands the attraction. Besides lithium, electric car batteries also need other base materials such as cobalt oxide and graphite. One of the leading suppliers of cobalt oxide is Russia, which Anderson identified as a risky nondomestic source for materials.
"One thing Tesla has to be sure about is the quality and reliability of its materials, and there's no place better than America for reliability," Anderson said. "I think China and Russia can be labeled fairly as unreliable trading partners. Perhaps one of the good things that can come out of this is that it will spur American producers into action."...
Tesla factor: Recharging Nevada's lithium industry
Jason Hidalgo, RGJ 1:06 p.m. PDT April 7, 2014Tough race
Not everyone, however, is hopping aboard the domestic lithium bus.
After seeing his fair share of lithium companies make claims about supplies in Nevada and either misleading investors or folding outright, Anderson of TRU Group is a lot more skeptical about domestic lithium prospects.
Anderson points to American Lithium as an example of a high-flying lithium company that made grand claims about a project in Nevada and then fizzled out.
"That company claimed to be the savior of American lithium supply — almost the same way that Tesla is being called the savior of the battery industry in America," Anderson said. "Now you can't even contact them anymore. I honestly don't even know what happened to them. They just vanished."
Only Western Lithium appears to be a viable project in Nevada at this point, Anderson said. At the same time, Anderson also described Western Lithium's plan to extract lithium from hectorite clay as opposed to the traditional brine ponds seen in Silver Peak and Chile as a long shot, at least from a cost-competitive standpoint.
Outside of Silver Peak, there are no other brine or salt lake opportunities in Nevada for lithium, he added.
Even Silver Peak is likely at the tail end of its days as a productive site, according to Anderson. With lithium production in the site starting in the 1960s, Silver Peak is basically running out of the material, he said.
"It was a good operation, but lithium concentrations have declined," Anderson said. "I'm actually surprised that Rockwood expanded operations because that site will be likely gone in 10 years. Silver Peak is even processing lithium brought in from Rockwood's South American operations these days...."
Tesla factor: Recharging Nevada's lithium industry
Jason Hidalgo, RGJ 1:06 p.m. PDT April 7, 2014
"...With the advent of smartphones and other portable devices, lithium saw its value skyrocket tenfold fr
om 2000 to 2010 before stabilizing to $6,000 per ton in recent years, according to U.S.-based development company Lithium Exploration Group...".
Western Lithium Kings Valley Lithium Project Pre-Feasibility Study Indicates $550 Million NPV and Supports Low Cost Lithium Production in Nevada
December 14, 2011, Reno, Nevada, USA -- Western Lithium USA Corporation (TSX: WLC; OTCQX: WLCDF) (“Western Lithium” or the “Company”) is pleased to announce the completion of a positive Pre-feasibility Study for its wholly-owned Kings Valley Lithium Project in Nevada, USA. Two scenarios were evaluated: A startup scenario based on mining and processing ore at a design throughput rate of 2,100 tonnes per day (13,000 tonnes per annum lithium carbonate), and a full production scenario to double production four years after startup (26,000 tonnes per annum lithium carbonate). The study demonstrates that the project could produce lithium carbonate at an estimated average cash cost, net of by-product credits, of $968 per tonne once full production of 26,000 tonnes per year lithium carbonate is achieved. Initial startup capital, including contingency is expected to be approximately $248 million. Incremental development capital to double lithium carbonate production to 26,000 tonnes per year is estimated at approximately $161 million. Sustaining capital of $40 million including contingency, is primarily composed of surface mine equipment, expansions of dry stack tailings and surface water management, and mine closure.
part 2- NPV are at 10% SM (standardized measure) requirement
Gulf Coast 21 mm boe proved reserves -$498 mm NPV
The Gulf Coast area includes properties located in southern Alabama, southeast Texas and Florida. These properties produce from formations such as the Yegua Sand and Smackover Carbonate at depths ranging from 8,000 to 15,000 feet. During 2013, we invested $21.7 million in this area, primarily on well work and facility upgrades at the Jay Field.
Mid-Continent 5 mm boe proved reserves -$68 mm NPV
The Mid-Continent area includes properties located in Oklahoma, southwestern Kansas and the Texas panhandle. These properties produce from formations such as the Cottage Grove Sand, Atoka, Redfork and Lansing at depths ranging from 3,000 to 15,000 feet. During 2013, we invested $1.0 million in capital in this area, primarily on well work and facility upgrades in our Adams Ranch and Apache fields, and in the drilling of less than 1 net (2 gross) wells in the Mills Ranch field.
Legacy Jay oil field in Permian has over 1b remaining oil in place which matches BBEP long term strategy on buying high OOIL for technological advancement value creation
-best margin vs mlp peers
-hedges are not included in NPV SM calculations which adds additional future NPV
-opportunity to refi 9.25% sr notes
-rp ratio around 16 (prefer 18 overall but do have 18 arkla ) which is good ROR indicator
-reasonable maintenance capital efficiency rate
-(no gp) old gp owners took reduced ownership
nosweat SA article had some important points, author totally missed the value creation possibilities of the deal (future cash flows from res/hedges). article only considered one facet of value which is current cash flow and missed the value creation of future cash flows(reserves)they bought some strong revenue generating QRE fields and hedges
" Ark-La-Tex 49 mm boe proved reserves -$859 mm NPV
The Ark-La-Tex area includes properties located in east Texas, northern Louisiana and southern Arkansas. These properties produce from formations such as the Cotton Valley Sand, Haynesville Sand, Woodbine Sand and Smackover Carbonate at depths ranging from 1,000 to 11,000 feet. During 2013, we acquired an additional interest in the East Texas Oil Field. In 2013, we invested $27.3 million in capital in this area, primarily on recompletions, returning wells to production, artificial lift enhancements and facility upgrades in the Dorcheat Macedonia, East Texas Oil Field, Gladewater, Neches and Shongaloo fields. In 2013, we drilled 2 net (2 gross) wells in the Ark-La-Tex area, both in the East Texas Oil Field."
Permian Basin 34 mm boe proved reserves -$611 mm NPV
The Permian Basin area includes properties located in west Texas and southeast New Mexico and produces from a variety of reservoirs such as the San Andres, Grayburg and Clearfork formations at depths ranging from 4,000 to 11,000 feet. Many of these properties are under secondary recovery waterflood operations. During 2013, we invested $48.4 million in capital in the Permian Basin, primarily on development drilling in the Blineberry-Drinkard, Garden City South, Turner Gregory, and Wasson fields. In 2013, we drilled or participated in the drilling of 18 net (66 gross) wells in the Permian Basin. Other Permian Basin capital was spent on recompletions, artificial lift enhancements and facility upgrades, primarily in our Fuhrman Mascho, East Corrigan, G P M, North Cowden and Turner Gregory fields.
end part 1
You find ROC, SQM, FMC, TLH mentioned often but nothing meaningful on WLDC, yet, again that I can find related to the Tesla story!.
"envisage the production of enough rechargeable lithium-ion batteries each year by 2020 to power 500,000 Tesla vehicles. The factory would singlehandedly double world output of lithium-ion units. Sourcing the materials on that scale in North America may disrupt commodity markets, said Stuart Burns, co-founder of Chicago-based pricing and analysis company Metal Miner. “It really depends on how quickly Tesla ramps up their production and to what extent they are working with the supply chain already to ensure the capacity is in place,” he said. The factory is so big that without more cobalt supply there will be a global shortage, according to Burns. Right now, about half the world’s cobalt is mined in the Democratic Republic of Congo, a war-ravaged nation whose mining industry has been beset by allegations of corruption. Tesla says it gets its cobalt from the Philippines, where Sumitomo Metal Mining Co. started up a nickel-cobalt mine last year. There are only a few other viable new sources of cobalt, while global demand is rising 5 percent or more each year, said Stephen English, a cobalt trader at SFP Metals in London. “There are still a lot of cobalt units untapped in the Congo,” he said. The U.S. hasn’t mined cobalt since 1971 and has 301 tons remaining in a government stockpile, according to the U.S. Geological Survey. Tesla may look to Idaho, where Formation Metals Inc. (FCO) is developing a cobalt mine. The Vancouver-based company needs to raise $120 million to complete the project, said Rick Honsinger, a spokesman. Formation plans to approach Tesla about using its “ethically sourced” cobalt to avoid the political risks of Congolese metal, he said. Lithium, another key material in electric vehicle batteries, is produced mostly in South America and Australia. Suppliers such as Rockwood Holdings Inc. can quickly expand production to accommodate rising demand, so the Gigafactory shouldn’t lead to large price increases, Anderson said. Tesla could tap Rockwoods SP.
silly "Freight is not an important factor on an expensive material ". A cost is still a cost and lowest freighting cost adds margin and profit some day and that was surely one of Nevada's selling points.
giga plant site sits halfway between Interstate 580/US 395 (which runs down middle of Reno) and alt highway 50 where the $43 mm upgrade will be made presumably for transportation tie in from US 95 (Silver Peak route) .Trivia the actual plant site is in "Sparks" Nevada and musk tweeted 2641 portofino drive (site location) will be renamed electric avenue
any to add some of the etf's, etc. have to start capturing income tax exposure so probably better now than in dec
should say 25 kg packets
If you would educate me on your silly comment about why hauling that much Li2CO3 by train a day average (recognizing it will not be every day) from around Winnemuca ~165 miles to Tesla site outside of Reno (plus road transport from WL site to Winnemuca) may not be cheaper than by truck all the way from Silver Peak with some of the uphill climbs around Hawthorne? (note package size is from Rockwood)
fyi meant to say " Around 70 miles from WL site to Winnemucca is road"