BRM 0.00% $2.53 brockman resources limited

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    The Australian

    SUDDENLY, out of nowhere, a new leader has emerged.

    That's right, Brockman Resources has made a well timed dash to split the pack of iron ore juniors and take the lead in the hotly contested sector.

    In a group where Fortescue Metals is God, Brockman looms as Elvis and the rest of them are beginning to look like the Jamaican bobsled team - full of promise but likely to crash at the fourth corner, or make it to the end of the run years after everyone else has.

    At the time of writing, Brockman shares had doubled ... scratch that, they're up 125 per cent now and moving forward.

    It seems everyone missed the fact that Brockman was about to release a whopper of a resource for its Marillana project in the Pilbara, which borders ground held by both Rio Tinto and Fortescue Metals.

    When the statement revealed Marillana was a 1.1 billion tonne resource, with 338 million tonnes in the indicated category, traders went mad for Brockman stock. That's more than the other iron ore hopefuls in WA can claim to have on their balance sheet, but, as we will detail later, you can't quite compare apples with apples.

    But the interesting word is that the announcement has piqued the interest of a certain New York fund that is piling in and filling its boots. Could it be Harbert? The same mob which made a killing on backing Fortescue Metals?

    We're not sure, but the offshore interest was hoovering up virtually all stock available.

    There's also a well known Australian who Brockman boss Wayne Richards said is an absolute pleasure to have on the share registry, and who wants more of the stock.

    They were also believed to be in the market yesterday, scooping up anything they could get their hands on. Apparently, the mystery person also took part in a placement of Brockman shares in November that raised around $9 million, but the company never released details of who took stock.

    There's not too much Brockman scrip around, with the top 25 holders controlling about 50 per cent of the company.

    Anyway, back to the resource.

    The low-grade hematite can be upgraded to around 59.5 per cent iron through beneficiation. There is a small pod of direct ship material, but let's discount that for the moment.

    The company's initial testwork showed it would have to move around 1 billion tonnes of dirt to yield 550 million tonnes of marketable product. That's a whopping big bill right there.

    One analyst told Daily Assay that that would mean Brockman's ore would be some of the most expensive to recover in the Pilbara, at around $35 a tonne, and double the cost of BHP and Fortescue ore.

    Also of note is the high alumina content for the ore, which is in tenements near the Hammersley Ranges and about 30km from Fortescue's Cloud Break operations. But the good thing about the stuff is that it is a free dig and doesn't need blast and shovel help.

    It is with Fortescue that Brockman will probably need to execute some kind of agreement to process its ore, if it ends up seeking a blending partner.

    Also, there is no guarantee yet that BHP would come to the party and transport Brockman ore on its rolling stock.

    But this won't stop the Chinese from continuing to knock on Richards' door and for Richards himself to try and lock in customers and access to infrastructure.

    At the moment, the company wants to start production in 2011 at perhaps around 10 million tonnes per annum. Who knows what the price of iron ore will be in three years?

    But for the time being, Brockman will continue to push forward with more metallurgical testwork and combine both a pre-feasibility study with a feasibility study, given that it has already done a lot of hard work on the plant design.

    And maybe there’ll be a celebratory drink or two this week, while it takes its turn as the market darling of the moment.

 
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