I am surprised by the lack of comments on this stock. I initially thought that this could be a winner. The longer that I am here the more I understand why the hate. This project has failed twice before principally due to the bombing out of the IO price. The DSO still has to be concentrated c3:1 and a percentage of it has to be dried. So there is only three years DSO mine life. So the cheaper CAPEX cost to market is only a stepping stone. Therefore the decision to go forward has to be based on the magnetite. The magnetite has to be concentrated and a portion dried. If the moisture content exceeds 4% the product freezes in the rail car and halts any production. Seasonal cartage makes the project opex expensive. The magnetite concentrate has to be pelletized. The two great things is that the Fe content will be near 70% and there is lots of resource.7.2 B tonnes at 3:1 concentration rate gives 2.4 B tonnes. At 100 Mtpa this is a 24 year mine life. This would have to be the main play based on that there is more material available. A holistic approach will be needed.
100Mtpa is a problem in that the existing rail is only good for 18Mtpa on the first leg and 50 Mtpa on the second leg. A 150Mpta railway will have to be built with the capacity to upgrade to a maximum 300-350 Mtpa. Or a slurry line (actually 5 for the volume). Canada National railway stopped a feasibility study in get a line up due to it not getting >80 Mtpa committed. Rail frieght will come in at 2.5 cents per tonne kilometre subject to future rises. Slurry line will only be 60% of this.
So this project will be a major CAPEX. Back of the envelope is well north of $US 10B. Opex using Joyce Lake DSO is $36.27 mine costs, $25.06 Rail and port costs and $33.93 shipping to China. Premium for 70%Fe content between $30-35. Slurry line will save $10. Shipping to Europe will save $16. The magnetite will concentrate cheaper but then it will have to be made into pellets. If they integrate carbon capture they could get green credits.
The BOD are not cashing in the EUR shares. It will be 18 months minimum for them to be of value to CLE. In the interim the BOD are taking shares inlieu of directors fees. What is needed is a clear concise plan to go from a zero cash (EUR shares are not helping) company to a $4B company with a $6B project finance.Anything short of this, the BOD are in "The Castle" territory - they're dreaming.
In the meantime, I am prepared to sit on a couple of million shares and see. I am not convinced to put more.
Add to My Watchlist
What is My Watchlist?
