magnetite vs hematite, page-2

magnetite does not have a higher iron content than hematite

high grade hematite has a 60% to 65% iron content and medium grade hematite (eg. FMG) has around 55% to 58% iron content

magnetite will range from 18% (eg. IRD) to 35% iron content thus magnetite must be processed through high capex high opex operations

where as hematite is generally direct shipping ore ("DSO") or at times washed first, especially if it has high impurities

however, the final magnetite product will have a higher iron content than DSO hematite, with standard magnetite operations producing iron concentrates of 67% but at times reaching 70%

another important factor with magnetite is the 'grind size' required for processing

the big WA magnetite plays such as GBG have a very low grind size (around 25 microns), thus the capex & opex costs are much higher

where as other magnetite plays (eg. AHN, RHM, ROY) have a much higher or coarser grind size (130 microns to 75 microns) so their forecast capex and opex is lower

however, recent feasibility studies for RHM and AHN show their total opex per tonne is at least $65 (although it is the transport costs blowing out these opex due to location)

where as BHP's, FMG's, RIO's, etc, having opex (operating costs) of around $15 to $35 per tonne for their DSO

plus DSO capex requirements are far less

for example, to produce 10mtpa of magnetite concentrate, the CAPEX for a plant will be around $2 billion

(see the RHM investor presentations which compare the "capital intensity" of various magnetite companies and possible read my posts on ROY, for which i am no longer a shareholder. i dumped my magnetite stocks 3 months ago in the stock market panic)

the problem with magnetite stocks is the very high capex

thus many mag companies such as MMX (Murchison) and ARH (Australasian Resources) are going nowhwere, despite years of planning

also, if long term iron ore prices fall then the profit margins will be squeezed and elephants like GBG may become unprofitable

regards