High Grade Ore, page-12

Liquidity is starting to pick up nicely. Frader - is this still on your watchlist?

I think that CAP may have timed this very nicely and have reasonable prospects of this mine going ahead given:

* the current support for iron ore price,
* demand for higher grade iron ore (keep an eye on stories on hot copper home page re demand for higher grade iron ore as there have been a few recently),
* existing infrastructure reducing risk and time to production, and
* current low interest rates improving funding options and NPV.

Investor presentation released today has target margins per tonne of US$50 to US$70. But at a conservative AUD$40 per tonne and 10Mtpa, that's $400M per annum.

I assume that CAP will need to sell down its percentage ownership (currently around 60%) to get into production. Even if CAP retains 10% that's a conservative $40M per annum with a long mine life.

I acknowledge that CAP is still a long way from being a producing mine, but its only real hurdle now appears to be funding - and given current low interest rate environment and increasing demand for high grade iron ore, I feel the funding hurdle is starting to get a little easier to get over.