iron ore up again

Iron Ore price up to $132 for 62% Fe.

We have seen a huge bounce since we the lows a few months ago and it looks like the Iron Ore miners and explorers have a long way to catch up to the underlying commodity price. We have seen money flow into the big guys RIO and BHP - both of these are at 8 month highs. Money will eventually flow down the food chain to the likes of FMG, AGO and MGX as well as explorers such as EQX.

With EQX looking at releasing a JORC and Scoping study early next year it looks like timing wise the delay may be a blessing in disguise.

If we can show the market that we have a project capable of producing high grade ore (65%) with a very low capex and opex I think we will see a significant re-rate in the share price and potential corporate activity. I think the sharp pullback in the Iron Ore price had many concerned but the speed and magnitude of the recovery suggests it was more a short term blip then a structural problem in the industry. A strong Iron Ore price is going to result in majors looking to pick up good quality assets that sit low on the cost curve.

EQX is a standout due to the infrastructure which not only saves a significant amount of money in terms of Capex but also ensures production can be achieved in a relatively short period of time.

I think the next few months are critical for EQX with some very significant announcements in the pipeline and I expect a sharp re-rating in the share price as a JORC and scoping study will significantly de-risk EQX and furthermore allow bigger players to more accurately run their numbers on the Mayoko project.

I also expect more Bandondo drilling results which will hopefully further prove that it is a great asset in its own right.

Hopefully 2013 will be the year for EQX.