With the hopefully positive focus on Iron Valley lets not also forget the capacity for impending news on Bungaroo South, with surely a WA government decision on Anketell due soon that may create a catalyst for further deal making. There is just as much scope for value creation from this deposit as Iron Valley and Im sure the IOH team is making progress on various fronts.
From the Bell Potter report 20/12/2011:
"The integrated nature of Bungaroo South and Buckland Hills lends to co-development which would provide technical and financial synergies. API is the natural owner and developer given its broader WPIOP project. The combined resource is 437Mt which gives the combined deposit scale, reasonable Fe grades, but in combination would be relatively high in alumina and phosphorus. Commercialisation options being proposed by IOH are similar to the production JV and royalty options discussed above for Iron Valley. However the challenge of creating a compelling reason for another player to deal soon is similar.
A weakness of API that could be exploited by IOH is that API has aggressive growth plans which are not yet fully supported by resources. Stage 1 of the WPIOP has been permitted with mines producing up to 30Mtpa. Recent adjustments to the Anketell Port proposal sees API with 50Mtpa of capacity, but this is yet to be underwritten by resources. This was intended to come from Hardey to the south west, however the Mt. Elvire region is closer and could be more cost effective. Buckland Hills is one of the deposits in the Mt. Elvire region designated to Stage 2. Expansion to 50Mtpa may not be until 2017, but API may need additional resources soon to underpin funding requirements."
IOH Price at posting:
$1.54 Sentiment: Buy Disclosure: Held
