I went through calculations under different scenarios and could not justify $1.00 SP. I assumed that MGX pays good dividend over the 6 year period and at the end returns the accumulated cash to the shareholders and also covers the outstanding liabilities associated with the mine closure.
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Good news for MGX are the very likely changes in the Chinese steel industry over the production period of the KI mine. In short: less pollution, higher quality steel demanded by the Chinese government.
MGX with their 21 Mln tons of high quality, low undesirable impurities iron ore fits the requirement very well. This is on the credit side of the ledger and I will leave it at that, don't want to upset the up-ramping process. The premium for the 65% IO should improve over the next few years.
Note how China is dealing with the emission through environmental protection tax.
China pushes steel mills for ultra-low-emission upgrades
16:14 Apr 30, 2019 Source: SMM
SHANGHAI, Apr 30 (SMM) – China's new, expanded, and relocated steel projects will be subject to the new ultra-low-emission standards, according to a statement released by the Ministry of Ecology and Environment (MEE), Ministry of Industry and Information Technology (MIIT), and other three authorities on Monday April 29.
The release also pushed rectifications of the existing steel capacity to meet the national ultra-low-emission requirements. At least 60% of the domestic steel capacity should complete the renovation by the end of 2020, and over 80% capacity by the end of 2025, according to the Opinions on Promoting the Implementation of Ultra-Low Emissions Standards in Steel Industry.
Provinces and cities were required to formulate plans for the renovation on local steel sector, and to submit them before the end of July.
For emissions of sintering machine heads, the hourly average concentration of flue gas with particulate matter should be no higher than 10 mg/m³, that of sulphur dioxide no higher than 35 mg/m³, and nitrogen oxides no higher than 50 mg/m³.
The hourly average concentration of particulate matter, sulphur dioxide, and nitrogen oxides, from other major pollution sources, should be kept not higher than 10 mg/m³, 50 mg/m³, and 200 mg/m³, respectively.
Steel mills with pollutant emissions 30% lower than the ultra-low-emission level enjoy a 25% cut in the environmental protection tax, and those with emissions below half of the required levels are provided with 50% cuts in the tax.
(20min delay)