breakout alert, page-34

SRK's problem is that they have good ore but nowhere near as much of it as first thought. The Cuzco leases were supposed to be upwards of 500Mt - 1Bt originally, but are likely to come in well below that. Similarly for Opaban. This is important, as the only way to get the ore to the coast is a slurry pipeline at huge CAPEX. Strictly speaking, SRK's projects probably have negative NPV in a lowered future pricing scenario. But it depends on when you think they will come online and whatthe iron price is then. In this sence, they are still a spec and attract a spec' pricing.