It seems to me like the overall strategy may be starting to shift a little. Management seems to be re-visiting the rail and port studies with a view of expanding operations beyond the initial 5mtp/a start up capacity, and there was much more mention of the greenfield port site. This seems to be being driven by an updated geological model that's including the bDSO and colluvial on top of the DSO, but also by the entrance of Exxaro and their future plans. All of this re-visiting will now take more time obviously. If more capaicty is required then it's going to mean higher CAPEX costs also.
I'm a little concerned that management is moving away from it's initial vision of using existing infrastructure to get the Mayoko DSO project up and running quickly, then using cashflows to expand from there. A higher mining capacity than 5mtp/a obviously means the likelihood of greater returns, but it also means the CAPEX will likely be higher and that CAPEX needs to be sourced from somewhere. The vision seemed to be a very strong one but now seems to be changing.
Interestingly, only 2,000m was drilled at Mayoko between 07/06/12 and 30/06/12.
EQX Price at posting:
$1.92 Sentiment: Buy Disclosure: Held
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