ADY 0.00% 2.2¢ admiralty resources nl.

pt answers q

  1. 47 Posts.
    Hi PT - thanks for that last answer, confirmed a few of my presumtions.

    Traph just gave us a *very* detailed post on the benefication process. Is there any enlightenment you can give us on the related question I've posted - repeated below? I suspect you are limited in what you can say by ASX rules, but worth a try! Maybe you could point us at some web-sites or comparative companies for research?

    as they say, be careful what you ask for! thanks for that Traph.

    But as you suggested it doesn't give us a handle on profitability for the iron. We know:

    1) It is low grade and requires benefication.
    2) Benefication doesn't sound cheap, but that's about as intelligent as I can sound on the subject.
    3) The ore is apparantly high purity, so there's a countering blessing!
    4) There is a significant (but not particularly high) port construction cost required to get out more ore (i.e. above the quantities p.a. that are planned over the next year or so).

    I hazard a guess that it's not clear to the market how the benefication and port costs (-ve) vs low impurity (+ve) and longer term ore prices (somewhat uncertain) stack up for profitability of the ADY iron operation.

    For my money the above is the reason that we don't have iron more heavily priced in, as these are all uncertainties that the market is waiting for more info on.

    Anything you can give us on that PT?!

    Just IMHO.

    Cheers
    MJP

    ----------------------------
    Hi Guys,

    I am flat out but here is a quick response:

    1. There is low grade and then there is low grade. If you had pure Magnetite (72% Fe) with no phosphorous, aluminium, alkalis or sulphur it would be easy - put in a 5mm crusher and a grizzly crusher and there you have it 72% Fe - the ore can be 2% concentration just it takes 50 tonne to get one tonne. The real issue is reducing the phos, sulphur etc. As you have read in past reports we are blessed in Santa Barbara with no sulphur. So we focus on reducing the phos. This is a dry operation, so the cost is pretty minimal, 150,000 litres of diesel a month to generate electricity and staff - thats it. As mentioned in previous ASX releases we have a fixed price of $12.25 per final tonne of ore plus electricity costs.

    2. Our drilling grade is 13.7% but our actual head grade is 23.2% (over 1m tonnes) which we reported to the ASX, so for every tonne of material (we have no overburden) we have about 3:1 to get it to 63%. However life isn't always that easy so sometimes it takes between 6:1 and 10:1 depending which block we are taking out, what the phos is, how much of it is natural fines and what is stock work, etc etc. We have constant monitoring so we can see the grade at any point in time and adjust the process to optimise the extraction process.

    3. You have to be a goose to not figure out 4. If we build a conveyor into the Candelaria port facility that cost Phelps Dodge USD$65m, for $7.5m then the payback is about 750,000 tonnes of iron ore ( about 10 panamax shipments - or three months production). Then we own it and we can send Santa Fe iron ore through it for the next 10 x years) at lower costs. If we build a port at Punta Alcalde the payback is two years as we save $8 in transport costs over 2 million tonnes per annum is $16m per year plus any revenue we can generate being the only "public"cape size port in Chile. However as our infrastructure opens up expansion we will go to 7.2m tonnes of iron ore so the payback period becomes 3.2m tonnes of iron ore or six months production if you ignore the opportunity cost savings.

    regards
 
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