No problems. I like many people have had their pants pulled down on projects that you were convinced would be a success (tunnel vision). I just wished that someone with a different opinion had stepped up to the plate to keep me thinking.
As for the Tiwi Islands. They made money from producing a concentrate, also allowing the chinese to make their cut. It's a really good policy when dealing with third parties especially the chinese (they just want to make money). As for advancing the project, it wouldn't have been a bad idea, but the Stirling issue was still present, Tricoastal may have said they don't want to take anymore, I don't know.
As for that relationship with Tricoastal now, they are either important or a big pain in the arse. Why I say this is that Tricoastal could take some or all of the sand, organise someone else to take it, or they could be hindering other third parties to deal with MZI (because they are supplying their clients with other overseas products), its hard to know. You would have to think they wouldn't jeopardise their investment, but maybe they make that much they've put it down as a business decision.
Gunson. Comparing an orange and a mandarin. Many of the same traits, but not quite the same. They had large issues that I mentioned on hundreds of occassions. Grade - they used a mark that was far from industry standard. JV partner - a nobody. And the big one - a massive capex of $180m. Also the plant being in the sticks. I used MZI's Tiwi Island plant as a reference for these guys and just making a concentrate.
"Seems strange to me that these projects would go so far down the road without securing an off take arrangement at an earlier juncture."
It's what I'm drilling into you guys, it's the key.
Huckle, Their is no point making something - if you can't sell it. Hence why Iluka have shut Eneabba. The banks are then worried if you cant sell it, you cant service loan - so its the chicken and the egg.
Dupont They are just chasing the lower end of their production profile. It's going for a couple of hundreds a tonne at the minute and you will find that Dupont were given an inducement price for a period of time (so it probably wont make a lot at the start, hence why I posted the lack of information regarding the selling price). To be honest, it's just a stocking filler.
Offtakes Many of them prior to 2008 were at a fixed price but a floating volume level. So the end suppliers screwed the sand boys with price, then would whack them with lower volumes. This helped keep the price down for years and years, because everyone kept saying the volume would pick up, but it was all a ploy. This hurt companies like Iluka because they borrowed hard. The only way out was to sell more - lower price, change contract terms, ask for higher grades etc. etc. Hence why Iluka were $3 for years.
The market has since changed from 2010 (with the help of China) and it's very much an open market (Iluka's product is sold via an auction on their website). Iluka are now bigger, better (have no debt) and are smarter. They just shut down plants in response to any fall in the market. But what this model does, is bring volatility to pricing and volumes. That's why you saw a 46% drop in production year on year.
MZI need an offtake agreement based on the Iluka price model, mainly because that's what everyone goes by. But why would companies sign up when they could buy whatever volumes they like, whenever they like from a company that has three specifically located warehouses across China and can guarantee their product?
You can see what I'm saying about having a chinese offtake partner can't you, and why I have spoken so much about Tricoastal getting you to second base.
Probably fried your brains with all that.
Pep
MZI Price at posting:
1.4¢ Sentiment: None Disclosure: Not Held
