On the 8th of September 2017, just last week, the company made an exciting and signification announcement regarding their growing relationship with Minera. NSL announced that it has signed a Collaboration Agreement with Minera Steel and Power Pvt Ltd.
As per announcement:
"Minera is an Indian company engaged in the production of pellet, sponge iron and steel in the Indian domestic steel industry. As an existing customer to NSL, the business relationship has been established and continues to strengthen.
The collaboration agreement outlines the high-level framework for business enhancement and to further progress the established relationship which the companies will collaborate on, specifically focused on the following key areas:
Setting up wet beneficiation plant for beneficiating low grade iron ore located at the Minera steel facility;
Setting up wet beneficiation plant for beneficiating low grade iron ore either in Karnataka or
Andhra Pradesh or any other locations as may be deemed suitable and necessary for both parties;
Acquiring or tying up with mine lease holders for purchase of leases, mining and/or supply of ore for beneficiation either in Karnataka or Andhra Pradesh or any other locations as may be deemed suitable and necessary for both parties;
To finalise a suitable corporate and business structure models in above areas or such other areas as may be identified while forging a long-term relationship.
As announced previously, Minera had re-configured their plant to accept the wet plant filter cake highlighting their intent to continue working with the Company. Minera are utilising NSL filter cake in their steel plant process with excellent results, producing a high-quality pellet with excellent pelletising characteristics and physical properties. The high-quality pellets are being successfully utilised in steel production.
Minera continue to desire a minimum of 15,000 tonnes per month of the premium NSL filter cake product for their operations, which currently require between 70,000 – 80,000 tonnes per month of iron ore."
NSL are located in the Kurnool District of Andhra Pradesh.
Latitude: 15°31'43.22"N
Longitude78° 5'34.77"E
What lies ahead for NSL
I personally believe that NSL have an extremely bright future ahead of them. If you’re read this far, you’ll have seen the many things that NSL have done right on their journey to this point. That doesn’t mean they haven’t made a lot of mistakes along the way, but the fact they have done the right things now puts them in an enviable position.
Over the past years, NSL have gained immeasurable experience in the following areas:
Importation of equipment to India
Commissioning of beneficiation plants
Site construction
Navigating approval processes
Repatriating funds
Hiring staff in India
Instilling a safety culture
All of these experiences and subsequent lessons have created what has been described by sopme as “intellectual property” that NSL and only NSL have in India as an Australian company. No other foreign company has this experience and that fact gives NSL a distinct first mover advantage.
Although the company do not align themselves to any particular political party, they do have the full support of the ruling TDP party and Chief Minister Naidu, who remains a popular leader for the state.
NSL believe they will achieve nameplate capacity of their wet beneficiation plant this October, following the completed commissioning this coming week of their new thickening circuit.
With Minera keen to absorb all of the production capacity available for NSL, the company should see revenues in the vicinity of at least AUD $10 million per annum. This should generate more than enough to profit to cover existing outgoings and enable the company to expand its management workforce and operational workforce further.
Following this significant milestone, it is highly anticipated by many shareholders that NSL will secure finance and plant suppliers using the services of their EPC contractor Xinhai, following the six-month testing process Xinhai have been carrying out.
This expansion finance and the associated equipment orders are intended to see NSL producing a nameplate capacity of 2.4 million tonnes per annum within the next two to three years.
That accomplishment should see the company receive revenues of at least AUD $120 million per annum.
Assuming the company are still progressing their Joint Venture agreement with Wei Hua, of which the state government have already allotted land, the company may also end up with a 50% share in a steel plant located at the newly formed 28,000-acre industrial hub at Orvakal.
Based on my own research of similar sized land allotments in India for steel mills, it would suggest to me that the steel plant will potentially be up to 1 million tonnes per annum in size, which would offer potential revenues up to nearly half a billion in AUD per annum. This is however speculation based on limited information I have (only the land size).
Once NSL reach their initial 2.4mtpa target, it is envisaged that they will continue to expand as they work towards their original target of 8mtpa production within 5 years.
NSL is still a highly speculative stock, but if writing all of the above has shown me anything, it’s that despite commissioning taking longer than expected and several parties not following through with purchase orders or offtake agreements, the company have made an absolutely enormous amount of progress on all fronts; political, financial and operational.
As this picture below demonstrates, real progress is being made on the ground. What may just seem like a three letter share code to most, is a real company, with real people, doing real work in rural Andhra Pradesh. Not just work to benefit themselves, but work to benefit both the local community and shareholders alike.
NSL doesn’t have JORC resources. It doesn’t have lithium, cobalt or gold. NSL has a story, a story that will undoubtedly be talked about in the future, as this small company worked hard year after year to turn nothing into something for not only their shareholders, themselves and their families, but for the local communities that are able to thrive due to the education, income and possibilities created by this company.
Further disclaimer. Map locations are not entirely accurate, and have been calculated using available information as per previous announcements. All announcements should be read in their entirety and have not been included here in full. Please utilise the links provided to read the full announcements. No information should be read in isolation.
