MGX 1.98% 99.0¢ mount gibson iron limited

mgx ann - final hurdle overcome

  1. 708 Posts.

    "MOUNT Gibson Iron has fully sold all of its planned 1.5 million tonnes per annum of production from the Tallering Peak haematite project in Western Australia thanks to a new agreement to annually supply 550,000t of both lump and iron ore to Prosperity Minerals.

    The iron ore will be used at Prosperity's new steel mill at Li Tang City in China where the first blast furnace is due to be commissioned in August.

    Mount Gibson managing director Brian Johnson said the contract would start in October and run until March 2009.

    This deal takes up the last of the available expected annual tonnage for the project, with Glencore International already taking 350,000tpa for its steel mill located near Nanjing and 600,000tpa to a subsidiary of Stemcor Limited.

    Johnson attributed the early success of the project to the company's sharp marketing approach for Tallering Peak.

    "The company is fortunate that there is a strong and increasing demand for iron ore in China and the high quality of the Tallering Peak ore is proving attractive to steel makers," he said.

    "Mount Gibson Iron can be confident of receiving regular and guaranteed payment for the $50 million in ore it will export every year."

    Johnson said mining was expected to start at Tallering Peak in July with the first shipments of iron to be made late in October.

    The company is looking to commission its second mine at Mount Gibson by the end of 2004, which will double ore production to 3Mt per year.

    Shares in Mt Gibson rose 4.3% today to 12 cents."

    Sovereign risk is ZERO.
    Financing risk is ZERO.
    Marketing risk is now ZERO.

    Only operational risk remains.
    With potentially 3Mt of iron ore per year exported by end of 2004, at net operating margins of $8 per tonne and with the stock on a market cap of $30M, it seems a good bet.

    Doesn't it?
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