This is despite it only having 5 years of mine life left, and high operating costs. From the RBC research report, it appears the total cost of production, per tonne of chromite ore for CSM, is around $100. I'd imagine the high costs come mainly from the fact that the ore has to be trucked 500km to the port, whereas CCI appears to have the beneft of far cheaper rail freight.
CSM ... 5 years mine life ... high operating costs ... valuation of $22m.
CCI ... 25 yr+ mine life ... relatively low operating costs ... higher grade chromite ore ... market value approx $15m.
The risks I see going forward for CCI are, securing a mining licence, then sufficient funding. After those two are in place they should be free to start mining.
I don't see funding a huge risk, seeing as the capex amounts involved are fairly minimal.
So I can only conclude that the market sees fit to place a discount on CCI's operations for the mining licence risk.
Surprising, seeing as there's nothing to suggest this could be a "project stumper" kind of risk. Would've thought worst case the licence granting is delayed.
Well, can't argue with the market ...
CCI Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
