Mr Market may attribute $Nil value to HAV's iron ore resources at Grants and Maldorky. Mr Gupta does not, based on Wednesday's ASX release.
Mr Gupta may need HAV, just as much as HAV needs Mr Gupta. My 'thesis' follows: Magnetite While it costs more to process magnetite, the product commands a premium from mills producing high-quality steel. Magnetite will be the steel making resource of choice going forward, particularly in China.
Mr Gupta is looking for sources of high grade ores and Fe concentrates, to replace the more polluting lower grade hematite ores. He is also looking for magnetite concentrate that has lower impurities.
58%, 62% and 65% Fe Pricing According to Metal Bulletin, earlier in the week spot prices for fines were:
58% US$40 tonne 62% US$68 tonne 65% US$89 tonne
Mr Gupta vs HAV Iron Ore Resources Surprisingly, Mr Gupta only has limited hematite and magnetite: total reserves and resources of just under 0.5 Billion tonnes.
Total JORC iron ore resources at Grants and Maldorky is 451,000,000 tonnes: 0.451 Billion tonnes. This number excludes the potential 'elephant' resource at the Grants Iron Ore Basin. IMLTHO, Mr Gupta would be most interested the potential resources at the Grants Iron Ore Basin, if it is has the potential to be, as Dr Giles said, a Pilbara-sized iron ore deposit.
The Grants iron ore deposit is interpreted to be the faulted end of a very extensive iron ore basin (the Grants Iron Ore Basin), the full iron ore potential of which remains to be tested by both Mr Gupta and HAV Management.
Imagine the Grants iron ore deposit as being the soap dish on your bathroom basin. The Grants Iron Ore Basin represents the bathroom sink.
Mr Gupta's Iron Ore As far as I am aware, he only has magnetite at the Middleback Ranges deposit. There is no magnetite at the Southern Iron (Iron Baron, Iron Knob etc) deposit.
The magnetite at Middleback Ranges is at total of 179Mt of iron ore @ 34.8% Fe. Assuming at best a 50% yield, that represents ~90Mt of Fe concentrate. His Middleback Ranges magnetite has, however, relatively high levels of impurities. The main impurity being silicon dioxide (24.4%).
At the Middleback Ranges, the hematite is 183Mt of iron ore @ 56.6% Fe.
At Southern Iron, the hematite is 34Mt of iron ore @ 60.7% Fe.
HAV's Iron Ore (excluding Grants Iron Ore Basin) Maldorky iron ore deposit 147Mt iron ore @ 30.1% Fe, at a 40% yield that represents 59Mt of Fe concentrate at 65% Fe.
Very low levels of impurities in the Fe concentrate. The main impurity is silicon dioxide (~4%).
Cut-off grade 18% Fe for the deposit.
Grants iron ore deposit 304Mt iron ore @ 24% Fe, at a 33% yield that represents 100Mt of Fe concentrate at ~65% Fe.
Very low levels of impurities in the Fe concentrate, similar to Maldorky.
Cut-off grade 18% Fe for the deposit.
Note: The HAV JORC resources refer to iron ore in the ground at XX % Fe (e.g. Maldorky it is 30.1% Fe and Grants 24% Fe). When beneficiated, this will upgraded to saleable product at a grade of ~65% Fe. Hence, for the Grants iron ore deposit the 304Mt is at an average yield of 33% (meaning 67% of the iron ore as dug from the ground is discarded during beneficiation) resulting in 100Mt of upgraded saleable ~65% Fe concentrate.
Waterless Ore Processor Improves Mining Efficiency Former chairman at Havilah Resources, Maptek founder, and large HAV shareholder Bob Johnson said waterless ore processing (called a Cyclomag) was a massive benefit for the industry. Great news for improving the economics of Havilah's Maldorky and Grant iron ore deposits, and a reason why he was probably at the presentation. “Water is a precious resource and expensive to manage when you think of the pipelines, bore fields and infrastructure you need,” Bob Johnson said. “Crushing ore to such a small size and doing it without ball mills and water is a breakthrough for the industry.” http://www.theleadsouthaustralia.co...ess-ore-processor-improves-mining-efficiency/
The demonstration system (see article above) can process up to 170 kilograms of magnetite per hour but Kelsey plans to upscale the system to a commercial level.
The Cyclomag has been developed by IMP Technologies in South Australia and works in conjunction with the company’s Super-Fine Crusher to deliver enhanced iron content with fewer impurities:
Both the waterless ore processor and Super-Fine Crusher, if they can be commercially upscaled, could be used at Maldorky and Grants (and the Grants Iron Ore Basin) to enhance the Fe concentrate %.
HAV Management's aim should be to maximise the 'fair value' of iron ore at Grants, Maldorky and the Grants Iron Ore Basin for shareholders.
If Mr Gupta really wants iron ore, he needs to pay a 'fair price' particularly if he wants a long-life supply of high grade and low impurity Fe concentrate.
Mr Gupta has the technical expertise and the logistical capability at Whyalla to handle iron ore shipments from the Maldorky and Grants iron ore projects. Most importantly, Mr Gupta has the cash and State/Federal Government contacts to make it happen.
Maldorky and Grants iron ore projects are favourably located in relation to GFG Alliance’s existing steel making operations at Whyalla, with a continuous rail link available. See link below, showing the railways in South Australia:
In fact, of all the Braemar iron ore deposits, the Grants iron ore deposit is the closest to a rail line. Giving it a huge competitive advantage.
Cheers
These are only my random (everything including the bathroom sink) thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.
HAV fanboy: still drinking the Kool-Aid
HAV Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
