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backwardsturtle

179 Posts.

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19/03/18

17:11

Post #: 31863907
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Originally posted by rocket973 ↑

fishfordayz, yes would have to agree. GMC is definitely undervalued IF,
1) GMC gets DSO approval
2) GMC can buy manganese ore from the Indonesian miners for US$100/tonne and then on sell it for US$370/tonne via DSO.

Then of course GMC is definitely undervalued, but will these two things happen? Unfortunately for GMC shareholders this is highly unlikely, as it needs to get both.

If GMC doesn't get DSO approval and is depending only on using Mn ore for the ferro manganese alloy production, the valuation will depend on the price GMC pays for the Mn ore. If the price GMC pays is US$100/tonne, yes GMC will do well, but will GMC be able to buy Mn ore at $100/tonne.
I don't think so.
I'd say that Indonesian manganese ore miners will provide a good discount, but I bet anything agreement will be tied to the market rate of Mn ore with a discount of say 20%.
If GMC has to pay US$300/tonne which is more than a 20% discount then the ferro manganese alloy smelting will be absolute borderline, mostly due to the expensive power. Remember it takes 2 tonnes of Mn ore to produce 1 tonne of FeMn. So you have a cost of US$600 for 2 tonnes of ore, add to that coke/coal and limestone/silica you can add another US$100/tonne produced. The expensive part is the power costing approx US$440/tonne at expensive Indonesian power costs. By the time all the snouts at the trough are fed there will be little in the kitty.

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I don't really agree with the 20% discount idea.

The miners in Indo can't sell it on the market, and can only sell to other processors, unless they process it themselves.
So I think we would be looking at a much bigger discount to market rate prices, as its not like they really have an alternative option in selling the ore.

Of course if we progress to running our own mine then this will derisk us further.

Anyone else have any idea as to what price we should be paying?

GMC Price at posting: 1.4¢ Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

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