next jorc, page-53

SSkim, apologies, been a bit busy, but the material is coming. In addition, this landed in my inbox:

(as I have stated before, word is getting around - now news from HKG)


http://www.highgrade.net/article/2011-10-27/Ord_looks_to_stay_the_course
Ord looks to stay the course

Paul Garvey in Hong Kong, 27 October 2011

AS A junior company pushing a huge bauxite development and a proposed multi-hundred-million-dollar spin-off, market conditions aren’t really on the side of Ord River Resources.

Aluminium is on the nose for investors in a pretty big way, and the market isn’t much more interested in new floats.

It leaves Ord River, which hopes to spin-off its SARCO joint venture in Laos into a stand-alone vehicle, in a somewhat awkward position but no doubt grateful for the fact it is partnered with a Chinese group that seems to stand a better-than-average chance of investing through a weak market.

Ord River has been a bit of a sleeper, identifying its large bauxite project on the Bolaven Plateau in southern Laos soon after its listing back in 2005. It attracted a significant partner for the project in the form of China Nonferrous Metal Industry subsidiary Foreign Engineering and Construction Co (NFC), and having undergone a board change along the way has since been steadily working to advance the project.

Shares in the company began spiking earlier this year after the company announced a memorandum of understanding with its partner that would see NFC build the project’s alumina refinery at a fixed cost price of $US1000 per tonne of capacity. That would leave the proposed 600,000 tonne per annum facility costing $US600 million.

In addition, under the MoU, NFC would help secure cheap Chinese debt for the development and have it operational within two years.

The joy from that announcement, which saw Ord River shares climb as high as A12c, has since worn off, with shares back around the 5c level they were trading at a year ago.

The trebling this week in the resource base at its flagship SARCO bauxite deposit to 77 million tonnes failed to deliver any real surge in the share price. A new resource is expected to be announced at the nearby Yuqida tenement, and Ord River is confident of seeing the total resource base climb through 200 million tonnes.

The reality is that Ord River and NFC face an uphill battle in getting their joint venture listed this year due to the current market conditions. While listing rules prevented Ord River’s head of corporate development Frank Zhu from discussing the finer points of the planned IPO, it’s previously been reported that the listing of the SARCO joint venture would be worth around $200 million.

That process looks certain to drift into next year. That at least will give the company the chance to bed down the feasibility study into the project before it chases its listing.

Zhu is ready to pitch the story if and when the spin-off goes ahead.

He wants to see SARCO grow into the third pure aluminium exposure available on the ASX, alongside the likes of Alcoa and Alumina. By being the first mover in the bauxite space in Laos, SARCO should become the dominant player in the country.

“If we’re successful in building the first refinery, we will have a stronghold on the future development of bauxite,” Zhu told HighGrade.

He’s already looking ahead to the next sources of ore that could eventually find their way into SARCO’s planned operations.

“There’s potentially other tenements nearby that we can acquire, and there’s other tenements in other countries that we can also purchase and develop. We believe we’re at the beginning of developing a new independent aluminium-bauxite player, to be bracketed next to Alcoa and Alumina,” he said.

Ord River and SARCO’s Laos bauxite is lower grade than that being exploited in China and Australia, something that will deter some investors.

But Zhu stresses that the much lower silica impurities will give it a bigger advantage over its higher-grade rivals.

“Our bauxite is only 2.3% silica, compared to Australia and China which run at more than 10%. What that means is our energy requirements to remove the silica is significantly lower,” he said.

“Energy wise, we need only around 160C [to remove the silica]. In Australia and China, you require something around 250 degrees. Overall operating costs will be so much lower.”