Good result.At moisture content of around 3.9% this equates to...

Good result.

At moisture content of around 3.9% this equates to roughly 14.7 DMT for the quarter. That's a roughly 13% increase from their December production numbers.

More significantly, however, is confirmation they are on track for a mid-CY launch of the South Flank. Iron Ore prices continue to hit new highs, and while they are unlikely to last, at current prices it is conceivable that over the mid-term DRR could be earning in excess of $350m pa (plus one-off payments for production increases).

There remains some uncertainty over how quickly MAC South Flank will ramp up production, but applying some conservative assumptions it's not unreasonable that we could see September quarter earnings in the $50-$75m range, accelerating to $70-$110m in the December quarter. Suspect peak earnings (from their current assets) will be reached early next year (subject, of course, to ore prices, exchanges rates, and aforementioned speed of production ramp).

In my opinion, even with an ore price of US$65 the MAC royalty interest alone is worth somewhere in the order of $2.3 billion. However, I suspect, given the fullness of market cycles, there will be a time in which an established track record, moderate ore prices (say, US$100/t real) and more balanced $AUD will earn the MAC licence a valuation north of $3.7 billion. Say that takes 10 years: From an investment standpoint, and inclusive of dividends, that equates to a total gross RoI somewhere in the 11%-14% pa range, roughly 7%-9% net real*, plus whatever other royalties they can acquire between now and then.

Obviously DYOR.

*Noting, of course, that an increase in inflation would likely cause a weakening in the $AUD while providing some support to the nominal ore price, while their almost complete lack of debt would help insulate them from financing risks.