re: Ann: Centaurus Acquires New Iron Ore Expo... CENTAURUS GROWS
Centaurus Metals (ASX:CTM) has added an export leg to its domestic Brazilian iron ore development plans, pressuring the market to have another look at its valuation of the stock.
The group has acquired the Serra do Lontra iron ore project in the south-east of Brazil which it says could be in production by 2014 at an annual rate of 1-2 million tonnes.
Forecast costs of $US32-$US43 per tonne loaded on to the ship compares with the (current) export selling price of $US150-$US170 per tonne, demonstrating the export project has some real appeal for a stock that last traded for 8.4 cents or a market capitalisation of some $71 million.
As it is, the stock was drawing valuations from brokers that were multiples of its current share price before it added Serra do Lontra to the portfolio.
On the strength of its plan to sell up to 3 million tonnes of iron ore in to Brazil's domestic market (steel mills in the famed Iron Quadrangle), Centaurus had scored a 12-month price target of 25 cents a share from Hartleys and 21 cents a share from Ord Minnett.
So it will be interesting to see where the stock goes from here. Unlike the rail and port infrastructure constraints faced by Australia's iron juniors in the Pilbara, Brazil offers low-cost solutions to help juniors export their product.
For Serra do Lontra, the plan is to truck the iron ore 140 kilometres on existing sealed roads to the deepwater export port of Ilheus. It is the sort of coastal dig and truck strategy that Atlas Iron has used to such great affect in the Pilbara.
Ilheus is an open-access, multi-user port which is best known in this part of the world for being the one used by ASX-listed Mirabela Nickel as the export point for its Santa Rita nickel sulphide project.
Centaurus reckons that after talks with the port authorities, it should be able to upgrade existing storage and berth facilities to handle its planned production rates at Serra do Lontra.
There is a lot of work to do before Serra do Lontra becomes a reality. Most notably is the need to confirm a supporting resource base of 30 million to 50 million tonnes of mineralisation suitable for upgrading to a high-grade export product. Still, a second leg to the Centaurus story can't hurt.
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