JWS steel just bought into 60% of ADY's sister mine (SantaFe) for around one billion. Similarly, WISCO wants in on ADY's tenements when 1 mtpa shipping capacity is achieved. So the mines are viable and the ore is highly desired by steel producers.
The processing cost for the production of magnetite concentrate is offset by the premium price which it attracts from steel mills because of the high iron content compared to benchmark DSO hematite products.
Steel producers pay more for refined magnetite ore because it is suitable for high-quality feedstock for the production of premium quality, low impurity steel.
In Chile wages are low (2.00-3.50/hr) so production costs can be kept low. I think it is about 35-45/t now and will reduce to less than 30/t when production is upgraded.
The backlog at China's ports is due to the Olympics and national holidays which shut down the steel mills for one month. Prices will pick up when stocks are consumed. I read the spot price for refined magnetite is still considerably more than the contract price.
At the moment we are only interested in offloading the refined stockpiled ore for the cash flow. More efficiency will be achieved after the mine is upgraded.
....and this is only the iron ore side. We have the lithium/potash production to think about too.
ADY Price at posting:
3.9¢ Sentiment: Buy Disclosure: Held
