I see the three most important statements in the article released on the 6th about Xstrata decision being;
1. Economics must stack up.
2. Smelter - This is a key part of whether the project will have the necessary IRR, NPV etc.
3. Southern part of land close to Limpopo Ferrochrome smelter. I have been on about this for a while now but only Stagman seems to have picked up on it. PGM/Ferrochrome synergies are extremely important for the competativeness of the SA ferrochrome producers of which Xstrata's Merafe JV is probably the biggest. I will not be surprised if a side issue to the BFS has been a synergy study between the PGM/Ferrochrome operations which would make the NKP package extremely more attractive for Xstrata SA.
There are huge returns available to NKP shareholders, who hold through to the final JV and (or) full acquisition scenario. I for one will not be tempted out of this by swings 20% up or down, the final prize could be huge!
BR Max
NKP Price at posting:
59.5¢ Sentiment: Buy Disclosure: Held
