Someone is putting some cash in. This placement is paid now and the rights issue is fully underwritten. That means that someone has faith in the resource.
The takeaway here is that they are looking at proving up MORE resource. The resource was centre on one area Greenbush. This was the area with the greatest potential. 7.2 billion tonnes is massive for the region and for magnetite. There was no reason to spend money finding more. We have gone and shown that there is 16.6 billion tonnes at Greenbush. Across the valley is the north west region. This area has the potential to have a significant tonnage.
The question to ask is why increase the initial resource quantity? This plays into the economy of scale. At present there is sufficient material to produce 100Mtpa for 33 years. There is investment in the rail, in the power and in the port. Are we looking at 100Mtpa over a longer period or a greater output? Somebody wants this bigger than it already is. That person is the buyer not the seller.
I was debating whether to rattle the coins in my deepest pocket. I am beginning to think it would be a good idea to dig them up and us them in the rights offer.
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