1. How are we able to extract and process ore at a crazy low price $22 tonne and sell for $55 tonne so a profit margin of $33 tonne which working off the 200,000 tonnes is a nice $6.6mpa profit when in full production of 8mtpa this would be a whopping $260mpa profit at today's prices on a company with a MC of $16m and just over 1bilion shares on offer.
As we operating in a remote region of AP, wages are likely extremely low. With access to underground water, an industrial power grid and abundant low grade ore, the company are able to achieve very low operating costs. The numbers are great, however people are skeptical and are waiting to see if they are actually achievable.
2. With failed MOU's in the past is there a big likely hood this will also fail. I know it was mentioned that this is looking brighter due being directly with the state government but does that itself pose risks, changed governments, voting pressure etc. (If it is anything like state governments in Australia they change daily and change their minds on what they are doing).
Since bifurcation, the state government has been working extremely hard to create employment opportunities and increase the welfare of those living in remote regions. With NSL's commitment to helping locals get an education, a job and providing a safe and secure workplace for women, the state government are doing everything they can to assist NSL in establishing and growing their operations.
These MoU's have already proven themselves to be a great resource, with the state government assisting the company with two HOA signings and enabling NSL access to additional land and a one desk approvals portal which saw the company receive power approval in 6 days.
3. How long is the MOU expected to stay in place? would this just be until we build the plant? until we process first ore? Surely we wouldn't put time and cost into something before an agreement?
The MoU with the state government is for five years and should remain in place that whole time.
The MoU with the Weihua Group is valid until we sign a joint venture agreement, which should not be too far away.
4. Is it the Indian practice to buy within their own state for iron ore. why not buy FMG, Rio, BHP etc, why NSL? are India heavily invested in NSL?
The price of shipping ore isn't too great that the country can't import it, infact they have seen a rise in importing of ore since domeatic prices dropped.
There are several reasons why the country would prefer to produce ore domestically. Similar to the WA state government, they potentially collect royalties. Local production means local jobs. Rail and trucking inland to where a number of the larger steel mills are located is costly and adds to an already higher seaborne price.
Since we are producing domestically, our operating costs are lower and we can subsequently sell the ore domestically for cheaper and still receive decent margins.
5. Can anyone attach or send the MOU with with the state government of Andhra Pradesh, their website is not up to date and I cant find much anywhere on it. does this MOU outline that the Andhra will buy all the product of the initial 200,000 tonnes and then late the 8,000,000 tonnes or just a small % of it?
It can be found on the ASX website. The state government MoU isn't to purchase any ore, it's to assist the company with reaching that goal. The state government are not a client. They want NSL to create jobs and help drive investment.
6. Obviously the plant is being being so I don't understand how that can be an MOU if the material is being shipped over, at what point will this become a agreement?
Not sure what this question is referring to. If you are referring to the new steel plant, it will become a JV before they ship anything. If you are referring to the Phase Two wet plant, we have purchased it and have two offtake agreements in place for the future ore production.
Again the government MoU's are to help NSL, nothing more.
7. Do we have any JORC report equivalent of what we have in the ground?
We don't have a JORC, as the ore is low to high grade, mostly between 20-50% Fe and we use a beneficiation process, we don't really need a JORC. We have access to at least 5 local mines now with plenty of feedstock.
8. Is there any presentations from recent times. I have lots of questions but don't want to go over the same information if it has been discussed.
Again if you look at NSL on the ASX website, you can see their company presentations.
9. I am struggling to see the real negatives outside of the fact these are MOU's and not agreements at this stage. I imagine when they become agreements the SP will reflect the potential earning of the $6m initially and later the $250m.
What we need in order to achieve those kind of profits is a client willing to buy the ore (JsW steel or BMM ispat or our own soon to be steel mill) and the plant equipment and infrastructure to achieve it.
It will take a lot of time and money, but it is possible within the next 5 years and with the help of the state government, possibly the Weihua Group and the AIIB, we may be able to achieve this goal.
10. I feel like I am missing something that must be staring right at me.
It is all potential, until they are producing it, it's all potential. People want to see results.
Sorry I couldn't include links to things, wrote this on the bus on my mobile
NSL Price at posting:
1.2¢ Sentiment: Buy Disclosure: Held
