Even if Ridley has capex of an additional $500M, there would be...

Even if Ridley has capex of an additional $500M, there would be additional revenue of about $200m per year with the higher grades plus likely lower operating costs for Ridley given the below.

Just another reason for FMG to either continue having a strategic stake in AGO or counter bidding which I hope can be done sooner rather than later. It should be looking at Ridley as the first priority rather than Iron Bridge.

The AGO CEO 7 years back did knock back $230M for 70% equity in the project at a time when high grades were not fetching the same premium they are today.


FMG Iron Bridge v AGO Ridley:

Cap ex to complete upgrade for FMG to additional 8.5mt of concentrate per annum is an additional US 1.2B.

Capex to complete Ridley project to full capacity of 15mt concentrate was A$2.9B using FX rate of 0.68 at the time. (It is likely there would be more efficient cap ex methods now since the major overruns of Sino etc. Please see article below about the Chinese having an appetite for our magnetite projects and more efficient methods potentially to reduce capex exist nowadays)


FMG iron bridge will produce concentrate at 67%, lower than AGO’s Ridley project at 68% (premium difference is about USD 10 per 1% grade above 62%)

Mineral resource is at 31% for FMG compared to 36% for Ridley.

FOB operating costs also at $36 per tonne of concentrate for Ridley. Unsure what FMG would be but given the distance to port is 45km more than Ridley and processing costs would be more given insitu grades of the resource is 36.5% for Ridley compared to 31.4% for FMG, Ridley’s operating costs should be much more comparable.

Also, the pre feasibility for Ridley was done using revenue of only $55 per tonne back at the height of the GFC in April 09.


FMG Iron Bridge project:

The site is located approximately 120 km south of Port Hedland and 45 km to the
east of Great Northern Highway.  Access to the mine site will be via a dedicated  mine site access road that connects to the Great Northern Highway.  This will  enable access for construction and ongoing support to the mining and processing operations.


The processing costs and recoveries were supplied by FMGL.  Mining costs were
based on cost modelling completed by Golder for earlier studies.  Cut
-
off grades used in the study are:

Stage 1 Plant Fresh
–
9% Mass Recovery
Stage 2 Plant Fresh
–
9% Mass Recovery



AGO Ridley

project:​

The world-class Ridley Magnetite Project, a 2 Billion-tonne magnetite resource, is strategically located within the Pardoo project area and is 100% owned by Atlas. The Ridley resource consists of banded iron formation (BIF) which forms part of the Ridley Range, with an average in-situ resource grade of 36.5% Fe. The resource was estimated by CSA Global consultants.

Pre-Feasibility Study
In April 2009, Atlas announced the findings of a pre-feasibility study (PFS) on the Ridley Magnetite Project. This study, which was the culmination of work by a number of sub-consultants under the supervision of Engenium, sought optimal solutions for mining, crushing, ore delivery, ore processing, waste and tailings storage, power generation, sources of process water, concentrate delivery and export. The PFS concluded that a large conventional truck-and-shovel open pit operation mining approximately 48Mtpa of magnetite ore would produce 15Mtpa of concentrate for export. Ore will be crushed in-pit and both ore and waste will be hauled to the natural surface by conveyors, with rock waste and tailings encapsulated together in a staged waste storage facility. The ore will be processed by multiple stage autogenous grinding followed by magnetic separation, with an end product of 80% passing 30 micron, containing 68.3% Fe and 4.3% SiO2.


China and Magnetite

:​

https://www.acbr.com.au/belt-and-road-can-open-mid-west

In May last year, China’s, President Xi Jinping, aptly labelled the Belt and Road Initiative as the “project of the century” that would benefit people across the world.
There is nothing more important to Australia and, in particular Western Australia, than the trajectory of China, and we need to make sure we do not waste this historic opportunity.
China’s open and inclusive Belt and Road vision is a strategic priority and Australia is one of the countries best placed to offer significant economic infrastructure projects of genuine substance in a destination of low sovereign risk.

Belt and Road provides an impetus to enable us to finally develop large, exciting infrastructure projects that we have long desired but have historically been unable to deliver.  

Projects like the port, rail, pipeline and downstream processing economic infrastructure plan based around a new port at Oakajee, 22 kilometres north of Geraldton.
This is a project that can open up the Mid West of WA. It is one ideally suited to become a flagship for Sino-Australian collaboration under Belt and Road.  
It has been delayed as a result of past bad decisions. But now is the time to present a China-led solution to take advantage of prevailing favourable conditions for the construction of major projects.
The Mid West, which used to be known as the Murchison, has a total area of almost 500,000 square kilometres. It is larger in size than each of Japan, Korea and Germany.
From Australia’s perspective, the Mid West is underdeveloped, being hindered by the lack of a deepwater port. China sees the region as a potentially huge magnetite iron ore province where it can play a leading role.
There is a commonly held perception in Australia the iron ore story is all about hematite iron ore. There is a false impression magnetite iron ore is a new, risky industry that investors should avoid. There are good reasons why there are strong magnetite industries in the US, Russia, China and the Middle East.
The challenges of China’s initial foray into magnetite projects in WA have been well documented, but lessons have been learned and the underlying benefits and appeal of magnetite remain intact.
There are many huge-scale magnetite projects awaiting development, whereas the big hematite projects to be developed are largely located in countries with high levels of sovereign risk.
Upgraded magnetite contains lower levels of contaminants, which is reflected in significantly improved performance in the furnaces of steelmakers. CO2 emissions are also reduced.
This is important to the Chinese government and would suggest the restructure of iron ore pricing that has emerged over the past couple of years is structural and long lasting.
Magnetite iron can achieve prices more than 200 per cent higher than lower-grade iron ore that is being produced by a number of Australian operators.  
This translates into magnetite producers being able to support a significantly higher capital and operating cost than DSO (direct shipping ore) operations.
Chinese mine developers in the Mid West have only been offered one solution, proposed by Japanese company Mitsubishi. The Japan solution was politically unappealing to Chinese companies and economically not feasible because:

• China’s perception that Mitsubishi sought to subsidise its Jack Hills mine, 400 kilometres north-east of Geraldton.
• The port and rail design was seen to be over-engineered and unnecessarily costly.
• Mitsubishi sought to underwrite the project solely off foundation customer supply contracts.

Many potential innovative solutions have emerged to significantly reduce capital costs, including a jetty rather than a breakwater and dredging program, transhipment options and a network of large slurry pipelines.
There are many reasons for China to partner with WA in the Mid West:

• China has already invested massively in mining projects like Sinsoteel’s Weld Range project and Ansteel’s Karara project.
• China is the end customer for the vast majority of expected production.
• China has the financial capacity to fund project costs.
• China has conducted extensive studies into the region.
• China has vast experience in major infrastructure projects.