I wouldn't be holding your breath for a 'massive' insurance...

I wouldn't be holding your breath for a 'massive' insurance payout.

The claim from the sea wall collapse is in two components - material damage (ie the collapse of the wall itself) and the Business Interruption (or loss of profits). The co has already advised that their BI claim has been submitted for review by the insurers so that tells me they only had coverage for a 12 month indemnity period (ie, loss period post the collapse - these policies can also insure for up to 5 year indemnity period, but obviously cost more - the 'standard' is 12 months).

Having done a bit of research, most BI insurance policies require the claimant to substantiate the 'Loss of Gross Profit' (as defined in the policy) when compared to the similar period for the pcp and also taking into account the financial year results. However, it also takes into account 'trends' in the business, and this would allow for the insurers to take into account the falling price of IO over that 2014/2015 period.

Following the collapse, MGX diverted work to another pit on KI, so it could be possible for the insurers to argue that 'Loss of Profit' was also reduced via the diversion of work into other areas - you can imagine the insurers argument, ie, "you (MGX) were working the main pit plus Acacia East and when the wall collapsed you diverted resources to Acacia East to ramp production up there, so the actual 'Loss of Profit' is not as great". The company will have to argue things like tonnage and grade quality from the main pit over Acacia East, etc, but its not a simply process.

Added to this is the fact you have multiple lines of insurers, who all have to agree on the final claim. I would imagine this will be a protracted, negotiated, "back & forth' process before the insurers finally sign off on the BI claim.

Anyway, as for the wall itself, it will be interesting to see if, with this small rise in the io price, MGX's modelling would be suggesting a rebuild of the wall or not, allowing for the cost of the rebuild of the wall by the insurers. Due to it's high grade, i'd be sure it will be their intention, however ultimate mine life will be an influencing factor, along with obviously, foretasted io prices over the next 4/5 years.

By the way, if anyone hasn't taken the time to view the very good Koolan Island 'Optimizing Life of Mine' video on the MGX website, i'd recommend it.

GLTAH.