Management have a Life of Mine plan for Koolan Island that is based purely on the current stated 'reserves' that total 12.2Mdmt(~12.6Mwmt) at 30Jun23 comprised of ore stocks(both in-pit broken stock and on the ore stockpile)of 1.2Mdmt and 11.0Mdmt(~11.4Mwmt) comprised of unmined ore. Doing a purely mathematical calculation based on 1.15Mwmt mining/quarter of the unmined ore then there is 10 quarters left until the current(30Jun23)unmined ore has been produced or approx 31Dec25. I will continue to use this Life of Mine plan whilst it is based on known and stated 'reserves'.
If Management prove that some of the known 'resources' are economic to mine and transfer them to 'reserves' then I will gladly increase Mine Life to take into account the additional reserves.
Peter Kerr is on the record in the last quarterly teleconference call on 19Jul23 as referring to 'the remaining 3 to 4 year life of the operation' - he would be basing this on his current shipping rate projection of 4Mwmt for FY24 - I believe this is conservative as they shipped 1.31Mwmt in the first quarter to 30Sep - so I would expect that they could achieve a shipping rate much closer to 5Mwmt for FY24.
Peter Kerr goes on(in the above call) to describe the remaining resources on KI as 'IO price sensitive' and that they represent 'an option value' based on future iron ore prices.
Every investor has to make up their own mind whether or not to speculate on whether any or all of these resources will be mined at some stage and how profitable that exercise would be in the future - in my opinion it would be difficult to imagine that they would be able to make a comparable margin that is currently being achieved if iron ore prices remain stable.
I certainly don't want to influence investors in their decision here but just to highlight what's been recently published by the Company and some investors might find the following as interesting although I would suggest that others would dismiss it as less than meaningful. Below is an extract(Pg14) from the FY23 Directors' Statement published with the annual financial statements on 23Aug23 - it is a part of the target reviews for determining short term incentives(STI) for FY23 and it is stated after this extract that for the coming FY24 that the Board will continue to follow the STI key performance indicators as listed for FY23, so including this following extract:
For comparative purposes, the comparative extract from the FY22 Directors Statement in the Annual Report dated 7Oct22 is below:
The Annual Report for FY23 will be released next week and it will bear to read both the Chairman's & CEO Statements to see if any light is shone on this subject.
MGX Price at posting:
44.5¢ Sentiment: Hold Disclosure: Held
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