NOTES FROM RESOURCE RISING STARS - ABX - PART 3
AGAIN - NOTE THAT I MAY HAVE SOME OF THE DETAILS NOT 100% ACCURATE TO THE NTH DEGREE AND I AM RELYING UPON MY NOTES AND RECALL. OBVIOUSLY ALSO THIS IS NOT ADVICE.
Non Tassie Mines - the Future:
Ian talked about Binjour and how wonderful the bauxite is, how plentiful, etc. He also talked about the fact (as pointed out in these boards by some of the less ABX enthusiastic punters previously) that it is a long way from the port with no obvious, or cheap, way of getting it there.
Ian did make the point that their preferred port is Bundaberg, which has the double benefit of not being Gladstone (so no need to dig up or damage the reef - I get the impression ABX are VERY SERIOUS about their environmental credentials); and that is a quieter and under utilised port that would welcome the business with open arms.
The existing roads are not a viable option as ABX would tear them up in months with the traffic to port. ABX are currently exploring 2 options, which I wasn't aware of so I will share:
1/ Old railway easements. These haven't been used for about 60 years, and according to Ian are very unlikely to be ever used again as they are not wide enough for the modern needs. This may present a viable option of essentially off road transport to port.
2/ Slurry pipeline. Ian pointed out that circumstance has the world's two best slurry pipeline experts currently based in Brisbane, and that they are opportunistically working with these guys to investigate this further.
The total CAPEX costs to get an operational and viable mining operation for EITHER solution would be in the vicinity of $100m to $200m dollars, with the midpoint of about $150m likely.
NOW THIS IS A LOT OF MONEY which led me to think of how ABX would be able to finance this, and made me think of takeovers etc. Ian had made the comment earlier that in their heyday ABX would be doing about 5-10 mtpa, and that they would essentially always be a Small Cap company.
When I raised these points with Ian he agreed that the takeover thing was always an obvious possibility as there are some giants out there with some very deep pockets who could gobble up ABX easily (my words not his). He stated his belief that the ABX shareholder base are a sticky lot though, and that the shareholders would not let that happen for anything less than multiples of the existing share price. I agreed.
I asked if this was the plan, the preferred exit strategy, and he said that there were other options, including an option where ABX would be able to retain the majority stake in Binjour (in the 50%'s) for an investment of about $20m, which would be well within ABX reach. This would also give ABX Operator rights and the remaining stake would be sold off to interested large player consortiums to finance the required additional funds. These could be sold at a premium of course.
I am not sure which option I like better. Decide for yourself. Probably the retention one for me the more zI think about it as a LONG term investment.
NSW is further down the track.
So there you go, you know what I know. I hope that it helps.
I bought more today (quite a bit more) because I see both short term (next 2-3 months) and long term significant share price increases coming for ABX. There is no real reason for the price to be where it is today, and almost certainly if not for the Euro investor selling out it wouldn't be.
Do what is right for you and do your own research.
Good luck all
(Go Cowboys, Go Broncos, Go Wallabies!!!!!)
Expand
