jorc umc, page-23

Chief,

the real company maker now won't just be the tonnage.
If they can get 100Mt of 60%Fe with low impurities, its how much they can ship that counts.

Will they get contracts to truck 1Mtpa or 2Mtpa? Will they get a rail deal to increase capacity to 5Mtpa or 10Mpa? Will they sell on the spot market?

If they can get a resource of 500Mt across all their deposits then, the transportation becomes even more relevant. Could they increase shipping to say 50Mtpa like FMG?

Who would you rather own shares in:
A company with 1Billion tonnes shipping 1Mt per year, or;
A company with 100Million tonnes, shipping 5Mt per year?

I'd go for the second personally.

Why I like UMC is that it has some of the highest grade ore around. Check out the grades and impurities from other pre-producer iron ore companies and you'll find they are usually worse (lower grades - usually 57%ish Fe, and high impurities Si > 4%, Al> 3%, sometimes P > 0.01%).

When crunch-time comes... the highest grade deposits are the ones which will survive.


Joel