Today?s AFR contained an extremely relevant article for holders of AXZ. As we await the presentation of our PFS in June the P17 article on Indo Mines , which is developing a similar Iron Sands project to ours , but in Indonesia, the article provides some useful insights as to what we might our PFS to reveal. Some key takeaways : Indo Mines deposit /comments recently made by the Company ? It contains up to 60% Iron combined with up to 9% Titania (TiO2) ? High TiO2 is undesirable in blast furnace feed BUT ? Vanadium content is a potentially valuable by-product ? Mining is simple, low cost and environmentally friendly How does it cf with ours : Our Titania content is much lower (~6%) ..great for us . Our Vanadium content is higher than average ...good for us again. -The Capex cost for the project is $50 tonne ...that would make ours around $50m ..cf $190 tonne for on-shore developments. -Indo?s expected production costs ~ $20 tonne. -Indo?s expected price/tonne for concentrate ~$75. -Can generate cash flow quickly. -Double expansion... ~$25-30m to double volume from 2m tpa to 4mtpa....most of the initial Capex is in setting up the port facility not the production equipment. Again fellas ...you do the math ..it is already out there in the public domain...potentially a GP of $50m pa for a Company currently with 58m shares. The numbers are absolutely compelling IMO. Regards Q Miner finds partner for Indonesian iron Ayesha de Kretser Indonesia-focused iron ore and coalminer Indo Mines has linked up with Japanese trading giant Mitsui to explore developing a pig iron facility in Jogjakarta. Indo Mines chief executive Martin Hacon said details of the contract with Mitsui were confidential but there was no agreement that the Japanese trader would market the pig iron - which is a type of crude iron used to produce steel - that was produced. "We haven't signed any agreement that they�d be trading the product," Mr Hacon said. The company is still on track to release a bankable feasibility study for development of a 2 million tonne-a-year iron sands concentrate operation by June. The pig iron plant would follow once cash flow was established from the iron sands project, as part of a commitment to the Indonesian government to invest in downstream industry. "It also makes good economic sense," Mr Hacon said. Indonesia is one of Asia's fastest growing economies, but ranks relatively low in steel consumption per capita. It is also reliant on imports of iron ore and coal to produce crude steel, as well as slabs to produce finished steel. Indo Mines expects to enter production of the 2 million tonne-a-year concentrate operation by mid-2012, at an indicative capital cost of just $100 million or $50 a tonne. This compares with costs of about $190 a tonne for BHP Billiton's recently released Pilbara expansion plans. Indo Mines expects to fund development of the concentrate project through a mixture of forward sales or offtake agreements, as well as debt and equity. "Through offtake we expect to be able to cover around $50 million of our costs," Mr Hacon said. The company's management said there was substantial interest in the projects at the "Mines and Money" conference that was held in Hong Kong recently. "There was a lot of interest in terms of potential offtake and assisting with funding," Mr Hacon said. Doubling the size of the operation from 2 million tonnes a year to 4 million tonnes a year could be done for about $25 million to $30 million, given that almost 70 per cent of the initial capital expenditure would be sunk into associated port and mine infrastructure. No firm plans have been struck for funding the pig iron works, but Mr Hacon said the company would "almost certainly be looking for partners". Although the iron sands product produced by Indo Mines would have higher impurities because of its titanium content, Mr Hacon was confident the company would find a market in China. Tianjin-based steel maker Rockcheck Steel has a 10 per cent stake in Indo Mines and is understood to be keen to secure offtake. Mining iron sands is a relatively cheap process. Mr Hacon indicated mining costs would be about $20 a tonne. In the current market, the type of concentrates Indo Mines expects to produce would attract about $75 a tonne, highlighting the potential for the company to generate cash flow quickly. Mr Hacon joined Indo Mines from BlueScope Steel's New Zealand steelworks, which produces 600,000 tonnes a year of slab from iron sands. The Australian Financial Review
AXZ Price at posting:
46.5¢ Sentiment: LT Buy Disclosure: Held
