game on for charles and axo

A copy of my post to ss - all good for AXO.

Another great little piece of news. The picture keeps getting better for AXO and the flow of information from AXO of late gives me great confidence that we are looking at a very good business in the making and with plenty of upside left in the tank.

To summarise the recent announcements:

28 February 2007: Announced JORC compliant resource of 103.8 million tonnes of grading 46% Fe and 0.63% V2O5 (this represented a 92% increase from previous estimates and is only roughly a third of the total possible reserves which are in the order of 300m tonnes).

13 March 2007: Announced the lon awaited signing of long term sales agreement with Chengde Iron & Steel Group Company. 15 year deal, 3 million tonnes p.a. of titanomagnetite iron ore concentrate. Expected to start supplying in 2009. This was previously expected to account for 70% of production and now accounts for 100% of production.

16 March 2007: Announced $3.2m capital injection from Hartley's Limited (4 million ords at 0.80/share) to complete the BFS on the titanomagnetite concentrate facility, continued exploration and general working capital. This answers Nippers earlier concern about where cash was coming from and now we can also look forward to the payments from Chengde as agreed under the MOU. Under the terms of the proposed alliance with Chengde, Chengde/MCC will make an initial farm-in cash payment to Aurox of $5 million to earn 10% equity in the Balla Balla Vanadium Project and 20% equity in the Balla Balla Iron Ore project.

21 March 2007: Announced non-binding MOU with "major diversified resources company" signed to review the vanadium and iron ore concentrate feasibility study and looking at a potential partnership. The details of the MOU remain confidential but it appears AXO is beginning to register on the radar of bigger players as a company with very sound potential having brought its resource to the current level of certainty. This MOU dove tails with the Chengde MOU and the hope is that they can partner up and bring the concentrate facility on the fast track to production. I suspect this outfit may also motivated by the titanium component to AXO's operations. AXO have openly stated they anticipate a positive outcome from the review and there is nothing as far as I can tell to suggest this is mis-placed optimism.

23 March 2007: Announced the potential for recovering titanium from the non magnetic tailings as a by product of the vanadium operation - another potentially handy sideline to the main operation.

Other salient factors previously mentioned:

(a) the two main projects/components to Aurox's business (1) Vanadium (they have highest yield Vanadium deposit in Australia) and (2) titanomagnetite iron ore concentrate to (estimated production of 3 million tonnes pa of vanadium rich iron ore concentrate alongside the proposed Vanadium plant);

(b) proposed mine life of 30 years;

(c) 90km to infrastructure (potentially 25km subject to development of new port);

(d) updated Vanadium BFS due and being beefed up to include iron ore benefication circuit to operate alongside vanadium processing plant;

(e) cheap cost of mining with simple bulk mining process and a strip ratio of 1 tonne of ore to 0.25 tonnes of waste (maintainable for life of the mine).

And potentially of more importance - management are doing a very sound job to date.

In terms of what's next:
The revised beefed up BFS and construction of the plant that will hopefully be kick started by the potential partnership - expected course of construction -
Stage 1: Build the stand alone concentrate circuit (est. $185m capital cost)
Stage 2: Vanadium circuit and plant (est. $290m capital cost) to produce 5900t of ferrovanadium FeV8O p.a.

A lot of potential upside here. The next few months should see some movement. PMA is a dead duck next to this in my opinion.