Great finds legendary. I was thinking EQX might try and push to...

Great finds legendary. I was thinking EQX might try and push to be producing by the end of the year, but wasn't getting my hopes up. I've seen the way timelines have slipped with both SDL and EQX, so I'm pretty conservative about dates now. EQX still has to get the Scoping Study out, probably a DFS/BFS, organise CAPEX finance (either JV or debt/equity), complete all environmental studies needed, and receive the mining permit from the ROC. There is a lot to do there, and time slippage could come from anywhere.

Chubbito had always mentioned that Exxaro was a natural acquirer of EQX, and it very much fits in with their plans to be moving 10mtpa by 2017. I agree with you though, that the company should press forward to production and then onwards to 5mtpa unless a very attractive offer comes along. The more the company can show it's capable of getting to production and beyond, the higher any bid will have to be to take the company out. A low ball bid can't succeed if the company has the real option of going into production itself.

IMO I'd like to see EQX fund the CAPEX via debt/equity if possible. Starting at that 500,000tpa amount should reduce CAPEX significantly from what we were thinking with a straight out 5mtpa operation. With the likes of M&G and Blackrock on the register, as well as JW & Schumann's London contacts, I would have thought they could give the debt/equity possibility a real shake. Being able to finance CAPEX outside of a JV with Exxaro means Exxaro would have to pay a higher premium if they wanted to take EQX over. The more options EQX has, the better.

I was flicking through another Exxaro presentation a few days ago, and they had 1.7Bn Rand budgeted for Mayko for 2013. I converted that to about AU$185m, and that's for a 2mtpa operation.

I'm not sure the market has it wrong just yet. I think that the market wants to see the Scoping Study, the infrastructure solution signed off, and a plan to raise the CAPEX. As each of these boxes are ticked off, I'd be hoping the share price would move upwards accordingly. If you think these boxes will be ticked off, it's a great buying opportunity.

I agree that producing 5mtpa with an OPEX of $50 should see a company with an MC upwards of $750m+, providing the IO price were to hold up at beyond $100p/t.