If the transhippers can consistently perform better than nameplate and the road upgrades finally comes along - MinRes can unlock several other stranded deposits in the valley at very low marginal cost. This whole set up is very scalable and the more we scale the better the economics gets to tackle low I/O prices expected in years to come.
Bao will be blending the 58% dirt from Onslow with the 65% dirt it starts to get from Simandou at the end of this year- These 2 projects are highly compatible with each other and part of a bigger plan by the Chinese.. Simandou may be bad for the big boys but it is good for Onslow in so far as demand for product is concerned. The I/O prices will be low but even at $85 MinRes gets its investment back in 2 years time and free carry this thing for 40 years milking services revenue, infrastructure revenue as well decent commodity returns.
So much hinges on that road now that I feel it was a good decision to spend $300M and 3 more months to put an additional asphalt layer onto it. Look forward to the June financial update.
MIN Price at posting:
$20.69 Sentiment: Buy Disclosure: Held
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