slow boat to china, page-18

Pelm,

58% Fe is great for a DSO channel iron deposit so it is you that is wrong. Channel iron deposits are BHP & Rio's biggest money spinners.

Yandicoogina's ore is contained within channel iron deposits, a type of ore believed to be unique to Western Australia, and contains on average about 58.5% iron and low amounts of alumina and phosphorus. Pit depth is about 55m, with an average bench height of about 10m.

The costs of production at Yandi is ridiculously low about $20 per ton to mine, rail, load onto a ship all the way to China with a price currently around $125 per ton. Even with the royalties they are somewhere in the $90-100 a ton profit margin on 54mt per annum which adds up somewhere in the $5b per year pure profit range or about half of the profit Rio makes from iron ore mining from 1 mine. Why is it so low, the ore body is known exactly where it is and drill and blast costs are kept to a minimum obviously there is economies of scale there that FAS won't match but regardless I expect their all in costs to be under $60 per ton. Mainly due to extra costs to use a public rail system and a third party port system. Once they ramp up it may go cheaper.

The ore body at SHIP is a major differential between Fairstar and any of the other hopefuls and their 24mt DSO is enough to give them an 8 - 10 year project life. They haven't proved up what lies beneath because they don't have to for them to make a compelling business case and also probably didn't have the funds to keep drilling.

Despite the calamaties from management the ore body is exemplary and it will be shameful if this company cannot get the mine up and running because someone else will. In hindsight they should have sold the GWR shares and spun the drill bit to prove up more DSO from SHIP north. If that has 100mt of DSO alluvials you beauty! PS if there is 100mt of alluvials how much hematite do you believe underlies that in the channel given they have broken off from the hematite over time???

Cheers