Cue to Geraldton looks like a similar trip to Bekisopa to Toliara. The roads are probably better in WA but the distance is a bit shorter for AKO. It’s good to see that FEX can make good cash with this haul distance.
I didn’t want to bust any bubbles, so I’ve bitten my lip until now, but I think 2mtpa is a little out of reach initially for AKO because it’s too much road traffic and too many trucks required. FEX at 1.3mtpa seems more realistic rate for road transport. As FEX demonstrate, there is plenty of money to be made at this rate and it will keep the capital cost down.
With our DSO, I’m not quite as optimistic as Paul regarding tonnage of the really high grade stuff. Paul says 8-10mt DSO resource expected, but I think what will happen is that we will need to start out at low production rate to keep the capital down. To make decent money at a low rate (eg circa 1mtpa) we will need to high grade the deposit to produce >>62% Fe to maximise the revenue in every shipment. This will limit the DSO resource by my calculations to around 4.5mt in the area just drilled, plus of course there is more high grade up north which we can drill later. We can probably also do some crude processing on site like screening and coarse dry mag sep to blend in with lower grade DSO to keep the party going.
I’m not too concerned because the project seems to me like it will stack up just fine anyway even at lower rates and even if there is only 4.5mt super grade DSO
A bit of humility and being willing to start small is what gets projects off the ground. Waiting for $250 million of capital is what bogs projects down and dilutes shareholders. Hopefully the consultants also think this way when they run studies.
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