I wonder if not MGX or FMG whether a company like Galaxy GXY...

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sharky1

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28/02/18

17:23

Post #: 31424266
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Originally posted by ralphmouth ↑

Hi Damianwrx, I tend to agree with your sentiment on magnetite projects getting off the ground, at present. Have a look the the FMG half year presentation. For me two main aspects stand out.
1) the drop in profit v's last year. Down by about $700m yoy. Still a good profit though.

2) the slide which shows the premium or discount in the sale price of ore depending on the grade of the ore. It's huge. If I sat on the FMG board I would be asking what are FMG going to do? From what I have read elsewhere this disparity in pricing is not short term and will continue. If the disparity gets larger profits will slump further, even though the FMG team have done a great job in getting the cost per tonne down. The slides also focus on what customers want. They also talk about getting the grade above 60%.

As an alternate strategy, a project exist in WA that is ready to go. The grade will be 70%, conditions for development are the best in a decade. FMG have the cash. They are currently using excess cash to repay outstanding debt. Cash flows are huge.

The project looks great from an environmental and marine perspective, which Twiggy is very interested in, judging from his recent purchase on Kangaroo Island and his comments on marine reserves.

It will be interesting to see what they do.

For me, MGX would seem a better fit, as there mines have a much shorter mine life and are fairly small in resource tonnes. They have been actively looking for a project for years and the $500m can't sit there forever. A
project must give a better return than bank interest, where it all sits at the moment. They also will have a very good cash flow when Koolan Island starts producing again in 2019.

A billion tonnes of magnetite ore must look appealing to MGX. It will all depend on the deal that can't be struck between the parties.

All this is hypothetical of course. May we live in interesting times.

DYOR

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I wonder if not MGX or FMG whether a company like Galaxy GXY would be interested? I know they are a Lithium miner but there are similarities in stripping, crushing, grading, concentrating....as well as power generation and GXY Mt Cattlin mine is about 1 hr away from Southdown. There could be some synergies from a JV and would diversify both companies...

GRR Price at posting: 20.0¢ Sentiment: Hold Disclosure: Held
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I wonder if not MGX or FMG whether a company like Galaxy GXY...

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