I don't buy it Paul.Mining companies have been operating in...

I don't buy it Paul.

Mining companies have been operating in Africa for a long time with sovereign risk and sovereign risk remains now. The risk may be lower but it seems as though that can change in a moment.

Foreign investment is not for free. Those who spend capital want a return in kind or otherwise.

As for the $5B project - who knows? My guess is that the deposit was sub-economic with freight costs so they tried another path, tried to get the government and others to foot a chunk of the bill or give unreasonable concessions and when that didn't happen it all fell apart.

What we're being told is:

- a high grade but sub-economic bauxite deposit 860km from a port has suddenly become world's best and will garner 'after-tax profits' of
US$200M - $400M per annum
- its share price doesn't reflect its glorious future
- even those in the bauxite industry are ignorant of said future

It may make some money but I don't subscribe to the boundless optimism.

Low capital costs? Who knows? As I posted earlier the high grade plateaux are 50km from the rail head so one is either going to spend capital in conveyors or rail or pay in operating costs to get it to the rail line. Birsok might be 10-20km away but grades are lower and reactive silica higher.

Beneficiation may upgrade the ore but it too requires capital and operating costs and may increase the moisture content of the ore leading to more freight cost. High grading the deposit will work I reckon but will this be the first orebody ever mined without dilution?

As for the current drilling - it may turn up something but were those who explored before likely to miss the best stuff? It's not like a vein gold deposit - a bauxite plateau is plain to see. What difference would a doubling of the resource make? Critical mass so more capital can be spent? That's not the investment thesis. High grade the high grades? Maybe but they have to be found first.

I refer you to the SRK resource report of 2009...