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14:55
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Originally posted by PS
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Good post @pe981 . I always enjoy reading your well thought out posts. You are quite right to point out that Fenix first two years of shipping was at a time of very high iron ore prices. It wasn’t long ago that Fenix reported their milestone of shipping 3m tons. I’m pretty sure that it took just over 3 years of shipping for Fenix to reach that milestone. Red Hawk is targeting to ship 1mt year 1, 2mt year 2 and 3mt year 3. Total 6 million tons. So double that of Fenix. It could be argued that the higher production and shorter distance to port are likely to lead to lower unit costs. So is it reasonable to presume that Red Hawk shipping 6mt at 60% Fe in their first 3 years of operation may be comparable? Of course, no one knows what the iron ore prices will be, but if averaging around US$125t Red Hawk ought to do well. Note IO has been around the US$105t recently. I believe that the IO realised price is Red Hawk’s highest risk. If the IO price takes off again there could be a very fast ROI, alternatively low IO pricing could be the opposite. If pricing north of $125, time to get those sparklers out. Regarding capital requirements. I’m pretty sure Red Hawk will be aiming for a ROI of 3 years or so. I think the likely biggest cost will be the haul road to the Red Dog. The shortest route to the RDH is the aim but it maybe that a longer haul road to the current seal section is needed if the RDH is not seal up to the mine turnoff in time. I believe the rule of thumb cost of building a suitable road is around $2m per kilometre. Mine site requirements will be minimal for DSO and SM has already commented on this (refer webinar). I would think the trucks would form part of the haulage contract. Regardless, we will all feel better when we know the numbers. Regarding haulage trucks. Fenix now own their super quads. Red Hawk will be starting from new so may benefit from new technologies and designs becoming available. Maybe increase tonnage can be handled with lower unit cost of transportation. It will be interesting to see what Red Hawk selects. I note that Fenix say their fleet is 30 super quads. Makes me wonder just how many RH will need. I like the fact that Red Hawk is likely to proceed along the Port Hedland solution. It is an (almost) worse case scenario. If and when another port becomes available nearer to Red Hawk’s deposits it will likely mean future substantial cost savings and margins. It could also mean substantial increases in tonnage shipped. Potentially RH could ship to more than just one port particularly during the potential nearer ramp up. I like some blue sky. I am delighted that RH no longer appears to be engaged with (or to, lol) BBI and appear to have finally found the courage to pick up the ball and run with it. The Scoping Study must be near completion so hopefully it will be released soon. Usual disclaimer. I am not a financial advisor. I make errors in my assessments and calculations so do your own research. Feedback, opinions and alternative viewpoints are most welcome.
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"...The shortest route to the RDH is the aim but it maybe that a longer haul road to the current seal section is needed if the RDH is not seal up to the mine turnoff in time. ..."
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