flying chromite price may stir consmin

Flying chromite price may stir ConsMin

Paul Garvey
Friday, 16 February 2007

MORE noted for its nickel and manganese production, the chromite division of diversified miner (and widely rumoured takeover target) Consolidated Minerals could pack a pleasant surprise when the company hands down its first half result next week.



ConsMin's Coobina mine

According to reports out of Beijing, the price of chromite ore in China – where ConsMin sells its product – has risen considerably higher in recent months on tight supply.

Prices in excess of $US320 per tonne CIF China (cost, insurance and freight to China) were reported earlier this month by Asian Metal, amid reports that international producers had begun breaching contracts signed at lower prices in order to cash in on the high demand.

A tightening in supply from Turkey, Iran and Pakistan was also attributed as a cause of the price rise.

Asian Metals reported that the "mainstream price" for chromite ore had gained $US50 per tonne over the past three months to around $235-245/t CIF China.

The news of the price surge echoes the sentiments expressed in ConsMin's December quarterly report, handed down last month, in which the company reported that higher CIF prices were being achieved for chromite.

"The Chinese chrome ore market strengthened during the last quarter of 2006 as a result of increased Chinese demand and some limitations in supply from Turkey and India," ConsMin said.

However, ConsMin said higher freight prices had put pressure on its returns despite higher CIF prices.

ConsMin's Coobina chromite mine produced 126,015t of ore in the half year to December 31 at a cash cost of $A123.47 per tonne sold.

The chromite division was ConsMin's best performed in the December quarter, with the Coobina mine the only one of ConsMin's three to record steady quarter-on-quarter output and a decrease in operating costs.

ConsMin is expected to hand down its first half financials next Friday.

The company has been the subject of rife takeover speculation in recent times, helped along earlier this week by a research note by London based Numis Securities – which also happens to be ConsMin's London-based broker and adviser – reiterating that ConsMin could be in the sights of predators.

"The CEO failed to appear at a conference last week, prompting further speculation over an imminent deal," Numis said.

ConsMin managing director Rod Baxter was unavailable for comment, but a spokesman told MiningNews.net the company would not comment on takeover speculation.

Shares in ConsMin climbed 4c to $2.25 in midday trading today.