Another Great write up on CTM,with fantastic news flow to support bringing the CTMOB into play, still ultra cheap at these prices !!!
Opportunities and insights for resources investors
MENULittle Centaurus offers big leverage to booming iron ore pricePlus, which WA gold miner spurned St Barbara?
31st May 2019
Barry FitzGeraldThe trickledown effect of the surge in iron ore prices in response to Vale’s January 25 tailings dam disaster is starting to take effect.
Project proposals consigned to history when iron ore prices tanked some years back are being dusted off in the hope that the $US100/t prices are here to stay for the foreseeable future.
It is something the big producers Rio Tinto and BHP fear could eventually undercut prices for the long-term as the pesky new producers stick around in the more sedate iron ore pricing expected to prevail in two to three years’ time when Vale gets back to its annual 400mtpa run rate.
But they don’t need to worry about Centaurus (CTM) with its boutique plan to get into production at its Jambreiro project in project in Minas Gerais state, also home to Vale’s tragically deadly Brumadinho operation.
Jambreiro is being dusted off as a potential 1mpta operation. It might be immaterial in scale to both the Brazilian domestic market and the global seaborne market, but it could be very material to Centuarus with its 0.8c share price and $22m market cap.
Centaurus was a 0.5c stock at the start at the month so in percentage terms at least, the highest iron ore prices in five years has been more material to its shareholders than the big producers.
Centaurus has long been a Brazilian specialist and before the recent spike in iron ore prices, it had shifted its focus from Jambreiro to the Carajas where it has nickel and copper/gold interests that more than cover its current market cap.
Jambreiro was the subject of a pre-feasibility study back in 2013 and the company has just announced it will do a new version “to capitalise on the new opportunities which have emerged in the domestic and international iron ore market in the past six months”.
Unlike most other juniors thinking it is time to reboot their iron ore ambitions, Centaurus has the luxury of Jambreiro already having a mining licence and environmental approvals in place for up to 3mtpa from an initial 18 million-tonne reserve of high-grade, low impurity material for supply to the local steel mills.
Focussing on an initial 1mtpa project means that financing the start-up should be all that much easier, with the resource base big enough to support a self-funded expansion in later years.
One of the more notable changes in the new PFS will be the adoption of dry-stacking of tailings over a wet tailings dam in deference to Brazil’s well-founded suspicion of all tailings dam, remembering the latest Vale disaster follows the Vale-BHP owned Samarco disaster in 2015.
Things have changed a lot since the last PFS on Jambreiro and there are many moving parts to the economic outcome of the new PFS.
But rough calculations suggest that even allowing for iron ore prices to come back to pre-Vale disaster expectations for long-term-terms prices of around $US60-$80/t, Jambreiro could be good for $A20-$A25m in pre-tax operating cashflow.
That’s kind of interesting for a $22m company. But first Centaurus has to deliver the project.
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