come on..., page-150

Just some further clarification on the MASSIVE differences between TTY and GRR (Grange Resources). Remember, TTY dig up direct shipping ore (DSO) and put it on a nearby train to be taken a short distance to port. TTY's cost of production per tonne is AU$46.84 = US$40.19, compared to GRR's cost of production of a much larger US$68.24!!! and they are also much further from China, making the buyer's shipping costs much higher and the ore less attractive. Why would China buy from Tassie if some of the other Magnetite producers in the mid west and the Pilbara get off the ground? Now take a look at this:

http://www.purchasing.com/article/279059-Vale_settles_iron_ore_price_cuts_with_Asian_steel_mills.php

have a look at the prices that RIO negotiated with Asian mills for pellets... only US$69 per tonne. This means that at current contract prices, GRR presumably can't sell their ore for much of a profit (if at all for a profit). In order to make a healthy profit with this stuff you need a big operation that is efficient and allows cost cutting and stream-lining. I presume GRR will need plenty more cash injections from their investors down the track.

Hopefully this helps to also highlight the huge differences between TTY and GRR and to see that just because a company says they have several billion tonnes of ore, doesn't make them a good buy. There is loads of magnetite about, but it is expensive to go through the process of benefaction to increase the iron content and produce the pellets.

I'm not trying to say that GRR is a crap company. I just don't see the point of the comparison to a small DSO operation in the NT. Apart from the fact that they both sell IO, there is no comparison...