PLV 0.00% 1.2¢ pluton resources limited

funding required fe $500m ebita pa v $65m cap

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    Iron ore stocks strong this week (Atlas, MGX)....fired up by corporate activity and 3 months highs for the spot price.


    ...(Why investors here, chase a stock almost 10% above takeover offer price is completely beyond me)....anyway not overly relevant! (ask Brockman and BC Iron investors how they got on with recent suitors)


    Pluton has a fully diluted market cap of $65m...they have produced a PFS, which suggests annual iron ore production of 4.4 mtpa...(or probably $325m to $350m nett profit PA - my calculations, at current Platts benchmarks and their PFS costings).

    Development capital of the mine is $550m to $ a two year repayment (IRR - 50%) current revenues/costs.

    The PFS suggests the discounted value of the shares are worth $3.80 today....compared with the current share price of 34c.


    So what is the problem here ? (Island location - so rail/port not an issue - no apparent technical, environment, or heritage issues.) Its iron ore, closer to Asia than any other deposit.

    Simply is a case,(well I guess it must be) that despite all the pluses...this project will not attrach funding.

    Investors staying well clear, because of a perception that 500mt of iron ore on an Island...... in the Kimberleys adjoining two wonderfully successful Island projects ie Koolan Island and Cockatoo.....wont get developed.

    They have it wrong in my view....and we may take a big step in the next few days, in proving so.

    Here is a good example today, typically of the type of competition for capital that Pluton face....if CAPEX is going into taconite - very low grade iron ore (rubbish) is little wonder that Pluton have many (they say 6), Asian companies wanting to invest in the project.....end grade will be used for car manufacture and other high end refined product. (because its that good)

    It costs $6 per ton to export Irvine Island iron ore to all those China east coastal ports (where the steel mills are based). Much cheaper to ship from the Kimberleys than congested China roadways and railways.


    July 21 -- Property developer Hainan Pearl River Holding (000505) plans to establish an iron ore company jointly with natural person Gu Lijun and Beijing Kangtai Industry Investment, reports National Business Daily, citing a company filing.

    ST Pearl River will invest 64 million yuan for a 40 percent stake, while Gu and Beijing Kangtai will jointly contribute 70 million yuan.

    The joint venture will be in charge of the exploration and sale of the iron ore resources at Dujiawan Magnetite Mine and Zhaojiayuan Iron Mine in Hubei province.

    Output of iron ore concentrate from the two mines is estimated to hit 450,000 tons per year from the end of 2012.

    The Zhaojiayuan Mine has recoverable reserves of 10 million tons of iron ore, with average iron metal grade of 15 percent, while the Dujiawan Mine has recoverable reserves of 40 million tons of iron ore, with average iron metal grade of 15 percent.

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