Excellent news today confirming that NSL's initial wet benefication plant is now not only running on a 24x7 basis (from greenfield virgin territory), but with the temporary assistance of high grade infeed is now producing output at 63%Fe which is beyond the nameplate out put grade of the plant as it is currently designed (i.e. for 58-63%Fe output).
This current order is for 20,000 tonnes (or 10% of annual capacity) at an ex-gate price equivalent to A$65 per tonne.
It has also been reported that the volume of high grade infeed received is sufficient to produce 63%Fe ouput in quantities greater than the 20,000 tonne IFO order - a strong indication of further possible orders from IFO.
We also know that a BMM order for 4,000 tonnes at 63% remains unfulfilled until the plant is capable of delivering at that higher grade. Unless this is produced with the high grade infeed diverted from producing the IFO order (highly implausible), this will more likely await the planned plant refinement conducted by their selected EPC partner, Xinhai, to raise nameplate output spec to 63-65% output.
We also know that Xinhai have been selected to double existing capacity in this calendar year (at the new higher output grade), and then add a further 1 million tonne capacity in each of 2018 and 2019. As part of their selection, they (Xinhai) would be looking to access development funding for us (NSL) from various development banks. However, we also know that (at company modeled costs and revenues) the capital cost of the plant (based on the first 200k tonne plant) is less than the free cash-flow that the plant can generate in 1 year, if operating at full capacity.
These expansions are all part of the journey to 8mtpa planned over the coming years. And NSL is currently the only foreign company that owns and operates mines in India. It has existing mines and mining leases to feed its planned beneficiation plants. Plants that are designed to take low-grade infeed and churn out 63-65%Fe ore at an operating cost in the low-mid twenties (aussie dollars).
We know that there is a surging demand for steel as a backbone in nation building and nation transforming infrastructure. We know that India, while being the third largest steel producing nation does not have the current capacity or supply chain to meet this expected demand. We know that this supply chain and capacity to produce steel locally must be built as the government has mandated local steel. The opportunities for NSL are immense. Not just in iron ore mining and beneficiation, but in upstream activities like pellet plants and/or steel plants. The state government has already allotted NSL land for these ventures, no doubt conditional on timely investment. We await the outcome of a feasibility study for a mooted venture in which NSL will be operator and 50% owner (entirely free carried) of said pellet and steel plant in Orvakal, Andhra Pradesh.
In addition to news on further order, the points in bold emphasis above are some of the announcements that I am expecting in coming months.
All IMO and DYOR. GLTAH
NSL Price at posting:
2.8¢ Sentiment: Buy Disclosure: Held
(20min delay)