zircon market profitability

Peppie kindly posted the latest TZMI price forecasts for mineral sands last week on a DRX thread. Looking at the 2012 forecast numbers, a zircon price of $3,500/t, Rutile $1,625 and ilmenite at $275, that equates to over $100m per annum free cash flow per annum for Coburn based on the published anticipated production numbers and cost profile. Using the old rule of thumb of a PE ratio of 10, that would mean a serious SP re-rating.

If GUN could take advantage of the the peak prices, they could fund the capex of the project after 2 years of commencing production. GUN cannot afford not to jump into production ASAP. This opportunity is just too good to let lapse or to drag on.