EXS's project (E1) is located extremely close to Xstrata's EH mine and given the size of their current operation, they needed more ore. E1 gave EH easy access to the additional Ore they needed to continue mining at higher rates.
There are a couple of reasons that Xstrata didn't buy WR, firstly is its just too far away from EH. Yeah it looks close on the map but if it costs you multiple $$ per tonne ore to move to EH then its not cost effective.
Think about it this way. 1% Copper equals Current Copper Price times 1%. So if current copper was trading at $8000/t, then 1% copper = $80 of copper in each tonne of rom. Thats before mining, transport, mining, plant etc.
The grades need to be pretty substantial to make up for trucking costs. Generally over about 30-40km's and it just eats up too much margin.
If Xstrata eventually buy Little Eva (AOH) then it must be right on the cusp of distance. Xstrata have the advantage of not having to build a new plant but I would think its marginal (in terms of trucking vs new plant).
WR's distance pushes it out too far, its the same for processing at Osborne with IVA and CDU are in the same boat. Basically they are all that little bit too far away to avoid having to build individual plants for operations.
Secondly, the BFS is clearly not good. It was done in 2005. QMN only finalised purchase of WR last year (I think) and a lot has changed since then. Costs will be significantly different, labour and plant costs will be higher and I'd be surprised if there was much thought put into Oxide vs transitional vs Sulphide.
My personal view is that QMN almost need to start again. The studies need to be completed from scratch by proper consultants and the money needs to be spent. Its a long road but if the original study wasn't up to the level it needed to be then what other choice do they have.
Solid management, solid plan, funds in the bank and get about doing the work. All the focus has always been about supplying markets with wildcat drilling, silly third party deals and all it did was make the WR project look like a dogs breakfast.
The reason no one else has made a play for QMN is that they have made the project look uneconomic because they have pursued everything else other than progressing WR.
Once they get their direction sorted I am sure there will be a lot more interest in the company.
QMN Price at posting:
5.0¢ Sentiment: None Disclosure: Not Held
