The Seaborne index 65% Fe IO concentrates published by www.custeel.com closed at US$135.82/tonne or A$193.39 yesterday, another muiti year peak.
At this price, KML mine could realised a positive cash flow of A$50/tonne or A$375 million for shipment of 7.5 millions tonne a year.
Further more, in the article "Surging iron ore drives mineral export value towards 2020 peak" appeared in Australian Mining yesterday, it mentionedthat the The Australian Department of Industry, Innovation and Science chief economist Mark Cully said “The seaborne iron ore market is thus likely to stay tight, and prices elevated, out to at least 2021”
As a result of this favourable iron ore market conditions, KML could be profitable for at least the next 2 years.
If the 65% Fe IO concentrates price is sustained at the current level of US$135.82/tonne for the next 2 years, KML could potentially generate A$750 millions positive cash flow from the mining operation. This would reduce the KML short term loans substantially and the mine will be viable even at 8mtpa capacity.
The buy out offer of A$0.026 per GBG share is ridiculous.
GBG Price at posting:
2.6¢ Sentiment: Hold Disclosure: Held
