With early drilling results exceeding all expectations and the likelihood that this initial drilling will prove up a maiden JORC of around 750m tonnes by mid 2012 perhaps its time to look at some operating costs compared with a similar mine in Australia (I do recall someone saying EIO wouldnt be able to compete) Based on a 20 million tonne per year mine and employing 300 people here are my back of envelope calculations...
EIO, Nigeria Australia AUD millions WAGES (300 staff) Aust. $150000p.a inc super etc Nig. $50000p.a. (way above wages there but we want 15 45 the best)
FUEL assuming 2 lites used per tonne to extract and transport (Nig. petrol 60c Diesel 75c Aust. x 2) 14 28
ELECTRICITY 25kw/h per tonne est. to process Nig 4c kw/h $1.00t 20 130 Aust 26c kw/h $6.50t NOTE; EIO ore is in sandstone and requires only a third the electricity of most other types of iron ore to process but to cover any unforeseen additional processing.
CARBON TAX (prelim. model by Royal Res. ROY (ASX) btw. $2 and $5 Tonne, say $3.50 tonne nil 70
MINING TAX unsure here, say $2 tonne nil 40
STATE ROYALTY unsure here also lets guess $3 tonne both WA and Nig. 60 60
TOTAL $135m. $373m.
Thats nearly a quarter of a billion dollars per year difference.
**These are only back of envelope calculations so not spot on, but you get my drift**.
With infrastructure well established and in close proximity to EIO, with only 10 metres of overburden,a soft, magnetic ore easily processed and mining gurus messrs. Burston and Carroll at the helm you may now be able to understand why I am so excited about this stock! Rock on June, 2012
EIO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held