$3.7 billion for a project over its lifetime at a production rate of 23mtpa and operating costs of $33/t exc.transport and capex (say $15/t and $20/t for capex) and given iron ore sales at $150/t. I would expect the project to generate net profits (before tax and royalties and assuming constant pricing) of $57 billion over a 30 year period. It represents about a 50% rate of return on initial funds employed or a compounded 9% rate of return over 30years - certainly beats anything on offer at the banks (10x the reward for ??x the risk). The problem is not so much the risks involved because the returns more than justify the injection of capital, it's more a question of where and who will provide access to such a sum of capital?
If you reread my post you'll glean as to how much more I'm willing to lose - it doesn't matter to me!
MMX Price at posting:
67.5¢ Sentiment: Buy Disclosure: Held
