This morning I wrote the following for myself, but as it may augment this thread, I paste it below.
The long-term transport plan for Perth (see http://www.perthnow.com.au/news/wes...h/news-story/ddbeb1158b4c8c65e48f42ef82885be9) is more a collection of ideas than a plan that includes costings, financial commitments and set dates, but the spirit of it all bodes well for NWH, and to a lesser extent BYL. The Labor Party would not derail this plan – it would merely prioritise things differently, and omit and add projects within the big picture.
NWH will emerge from the combination of the successfully completed Roy Hill contract, and the soon-to-commense Forrestfield-Airport-Link contract with a good record of rail building and tunnelling, and a reasonable bridge-building ability, which may improve over the next three years – witness, for example, the recent $30M RIO contract (http://nrw.com.au/wp-content/sharelink/20160617-contract-award-e7388a1a33b67da66a912ca80d0e8fae.pdf) which includes construction of a heavy-duty bridge over an existing railway. In the next five years there will also be some major iron-ore developments to replace exhausted mines.
Fortescue must replace the Firefly mine – see http://fmgl.com.au/media/2828/160727_june-2016-quarterly-production-report.pdf which in part reads, “Development planning is underway for replacement of Firetail within the next five years. This strategy involves progressive steps to develop satellite ore bodies and, in the medium to long term, will require the extension of rail infrastructure. High level capital cost estimates of this development are expected to range between US$1.0 to US$1.5 billion and, depending on the preferred strategy, are likely to be incurred between FY19 to FY21.”
BHP must start replacing its large Yandi mine in about five years time, but although the full replacement could stretch to ten years, initial work must start in less than five years – see http://www.nationalminingchronicle....ories/16114-bhp-eyes-massive-new-pilbara-mine, which in part reads “At the current rate of production, the resource supporting Yandi’s 80mtpa operation will need to be sustained from other ore sources at some stage over the next five to 10 years.” I have no idea what dollars would be involved, but for the want of a number, I would suggest $2B, based on the 80mtpa capacity relative to the 25mtpa capacity that Fortescue plans to replace.
Apart from the prospect of ramping up Silvergrass at a cost of an estimated $1B, and the current extension to RIO's Yandi mine, where NWH recently won a $30m contract, I have no information of what RIO may do. In a sense, it may suit NWH if RIO only increases the Silvergrass tonnage slightly, because NWH already has that work (10mtpa a year) and is likely to keep the contract if RIO expands Silvergrass only slightly at first – perhaps doubling the capacity in the near future. If RIO spends that $1B on Silvergrass, it extend its conveyor system to reach Silvbergarss (I think about 8KM), and NWH would lose the haulage contract. Also, RIO would also then be tempted to take over the mining itself, which is what it does at Nammuldi mine, the mine with which Silvergrass shares a common processing facility that is located between the two mines, but closer to Nammuldi than Silvergrass.
I do not know much about other iron-ore players, but something may spring to the fore there in the next 5 to 10 years.
In summary NWH will improve over the next two or three years thanks to contracts in hand, and reasonable prospects for a bit more, and after that there should be opportunities from the foregoing possibilities that may allow NWH to creep back towards being a $1B-revenue company. By my calculations, with my avearge buy price of 74.6c, I'll break even if NWH climbs to a revenue of $650M, achieves a NPAT margin of 4%, and the shares are valued at a P/E Ratio of 8 – there are 279 million shares, so (650 x 4% x 8)/279 ≈ 74.6c.
(20min delay)