Have been looking 'over the fence' at the neighbors in the western and central Pilbara. It becomes quickly apparent that for all the doom and gloom being presented by the majors about how difficult it is to get ore to port, and how limited the rail access is (the whole stranded asset story) IOH actually has some pretty good options open to it - SHOULD THE MAJORS BE OPEN TO A DEAL. For example, the new Mesa A mine is scheduled to replace the Mesa J mine which is nearing the end of its life span. After a two year construction period and expenses of A$1 billion, the mine began operation in February 2010. The mine is initially scheduled for a mine life of eleven years (this was taken from Wiki - so facts may not be 100pct but close to the mark)....to replace Mesa J it is expected to be producing 20-25 mtpa onto the Robe River rail line. For a mere 35km rail spur RIO could use Bungaroo South to almost double their production along the existing railway line. This would be a damn site faster than waiting for Anketell port to get up and running and represents excellent incentive for RIO to offer a cash deal for Bungaroo South even if they will not do a JV on it. Iron Valley is looking more and more likely to have an FMG offer on it (if only to allow them the rapid upgrades that they seek), and thus even if the new port does not have much room for juniors (ie if the FMG model gets the nod) then IOH can still get a win. The question for me is will IOH push for joint ventures or will IOH sell the farm for as much cash as possible and try to go it alone on the coast with magnetite? I guess we continue to wait for the consolidation of the iron ore sector to play out....
IOH Price at posting:
$1.34 Sentiment: Buy Disclosure: Held
