The difference between a 57%Fe and a 56%Fe sale for Bonnie fines...

The difference between a 57%Fe and a 56%Fe sale for Bonnie fines (BCI).

Assumption CFR62 = AUD$124t.

124 divided by 62 = 2

DMTU = 2

57 times 2 = AUD$114t
56 times 2 = AUD$112t

Two bucks a tonne difference. Even if the total cost of production is $76 a tonne (estimate). Profits go from $38t to $36t.

Or to put it another way. In the current environment, if the NIOJV exported 6Mtpa (4.5Mtpa BCI)at 56%Fe and not 57%Fe. The EBIT for BCI would drop from $171M to $162M.

BUT the benefits would be:

~A lower strip ratio, therefore less waste moved, therefore lower opex.

~A longer life of mine -- Even if only two years were added onto the LOM by dropping the grade by a percent.

Further more, not dropping the grade by a percent would potentially mean that there's $324M in export dollars that's been left in the ground and not in the back pocket of shareholders. That's $2.50 a share, or $25K for every 10K holding.

To note, I haven't placed the annual drop in EBIT by sticking to a 57%Fe grade for another 6 years into the above scenario. But considering there's currently 106Mt of CID @ 54.2%. An increase in LOM of only two years is probably conservative also.

Bonnie fines (BCI) 56%Fe LOI 12.3%

1000Kg minus 123kg (LOI) = 877Kg
560Kg (Iron content) divided by 877Kg = 63.39%CaFe

CFR58 benchmark is Yandi fines @ 58%Fe ; 64%CaFe.

Bonnie fines has virtually the same CaFe percentage as the benchmark (post sintering) at 56%Fe. With the most critical DE ~ Phosphorus, Bonnie fines is lower at a 56%Fe grade than Yandi fines.

I guess my question to BCI management is:

Guys, can we also sell 55%Fe ore, since 56%Fe ore is on par with the benchmark CaFe wise?

Please DYOR. Not meant as financial advice.