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Mynytho. Great post and I fully agree.
Why continue to pay the Australians?
Exactly what China is moving away from as per this article in Chinese...
“Since China is the world's number one steel producer, the demand for iron ore is huge. Although China's iron ore reserves are abundant, 94% of them are lean ore, and the cost of refining high grade ore is extremely high. As the world's largest steel producer, China consumes two-thirds of the world's iron ore every year.
Since the tragedy of Vale, the annual production capacity of over 90 million tons has been shut down. Shares of its competitors, especially in Australia, the largest mining country, have soared, including BHP Billiton, Rio Tinto and Fortescue.
There is no doubt that they will benefit from an environment of rising prices, but it may be difficult to increase production. Among the major producers, only Rio Tinto can significantly increase its supply.
However, China is no longer the same as it has been, and has gradually reduced the import of iron ore, and reached an agreement on mining resources in Indonesia, Ghana, CONGO and other countries.
The latest news: According to foreign media reports, the Republic of the Congo exported iron ore for the first time on April 19. The export volume was 23,000 tons and the destination was China. In 2017, Sapro SA, a subsidiary of Congo's billionaire Paul Obambi, started production at the Mayoko iron ore mine in the southwestern part of the country, with an estimated annual capacity of the mine by 2022 will reach 12 million tons.
Earlier, Australia took advantage of its own "privilege" to control the price of iron ore, often raising the price of iron ore in order to break this situation. In addition to the Chinese iron ore futures launched in May last year, our country has deliberately reduced its dependence on Australian iron ore.
In this regard, at the Iron Ore and Steel Forecast Conference held in Perth in March this year, analyst Mori said: As China's self-sufficiency in iron ore is enhanced, it is expected that in the next five years, imports will drop from the current 1 billion tons to 600 million tons, a drop of 40%, and Australia will suffer heavy losses!
Once China really reduces its dependence on iron ore imports and obtain more mineral resource exploitation rights from other countries, the good days of Australian mining giants are really coming to an end.”
https://baijiahao.baidu.com/s?id=1631776432843902720&wfr=spider&for=pc&sa=vs_ob_realtime&isFailFlag=1
Why continue to pay the Australians when you could own your own mine and create a vertically integrated steel business?
https://www.australianmining.com.au/news/fortescue-delivers-record-shipments-as-chinese-demand-spikes/
Scottology - "£1.80 special dividend and 20% free carry maybe?"
That'd work for me. Free up some cash and still be holding
I'd prefer a free carry to maximise full future value as they prove-up more of the resource beyond the 770MT, but as you say most of the possible figures banded about are so high everyone will be set for life anyway.
£1.80 special dividend and 20% free carry maybe?
If it wasn't a full takeover, you'd always struggle to decide when to cash-out, so definitely would make it easier.
scottology - £1 would be amazing for me and difficult not to sell my whole holding at. I'm just hoping it comes as an offer of multiple £s with the corresponding price rise to match to remove that decision for me.
When trying to value an asset it's easier to use recent examples of prices achieved.
Simandou was that example and at nearly £12 per share that would value ZIOC at £3.3billion - yes a big amount, but given this is approaching a $1 trillion asset - does it seem like a fair price?
If you reduce that to a super low-ball £3 offer (based on % of proven reserves in the ground) that would value ZIOC at £850million which is peanuts for a project of this size, scale and future profitability.
Somewhere in the middle would be preferred - my own target £8 or £9
Sit back and relax.
To be honest even £1 make my life a hell of a lot easier.
Anything better than that would be a bonus
I’d settle for IPO price of £1.59 which I expect to achieve within 18 months.
DGR I don't care how crazy people think we are at these predictions, they only have to look at the facts to know these predictions are not far off the mark. Hopefully September will see something concrete happen. gl
Regardless of an actual sale valuation, the current mcap is totally bonkers considering where the iron market is and the recent structural market shift to high grade ore preference. Should currently be sitting at 100p plus really..??? Mad, mad, mad.
I'm sorry guys, but predicting a 120 bagger is hurting our cause with potential investors looking in.
Optimism is all well and good, but if you dropped into any other board and saw that sort of prediction you'd think they were crazy.
£11.95 - I remember this number from a while ago...
In fact I recall a conversation with another investor who said all debate and negotiations start at £12... those who have read my predictions in the past are around the £7... in fact a target I set a year or so ago was £7.12... time will tell.
I'd previously done a calculation based on the Simandou purchase that would value ZIOC at £11.95 per share (excluding capex costs) so should be significantly more.
We've also now got confirmed higher grade ore which sells at a higher premium.
Remember that the interested parties in this have been involved for many years. It just takes time to get a project of this scale and complexity (given the nature of the politics/debt of congo) over the line.
As Dr R says, capital costs for Simandou are much higher. One of the reasons is Rio's plan for Simandou involves building 650km of railway to transport ore to the coast. Zananga is about 600m above sea level, our plan for tansportation is a 350km slurry pipe. When it comes to development, with no significant hills between the mine and the coast, even gravity is on Zanaga's side.
Like the diagnosis doc!
Well put my good Doctor! That is why we are all here.
Well put doc....
The tweet was quite interesting comparing Zanaga to simandou, which will cost 20 times more in infrastructure than Zanaga and also has less of inferior ore. Speaks volumes really. Rio paid $2.5 billion for 51% in 2010, and requires $20 billion spend. What’s that value Zanaga at what requires only $1 billion? More that 9p a share I hope.
Morning, I would go with that. Things are never as they seem. So much going on in the background. Patience needed but frustrating gla
We can safely say that the twitter post is not intended for attracting buyers for Zanaga, nor is it to attract investors to zioc shares so what's the purpose? I think it's indicating that iron is an in demand commodity and there's a lot of M&A activity and zioc maybe involved in some talks as it's great resource with great economic viability. Just my opinion. High risk and high reward.
I think its more than just a lame tweet. If AT and co really were talking to the Chinese about investing, a tweet like that mentioning an alternative home for Chinese money is the last thing he would tweet.
It's a total no brainer for any country or company looking to invest to choose Zanaga over Simandou. So why aren't they? Maybe the Chinese only want 100% ownership, and they know Glencore won't sell. Otherwise it makes no sense for anyone to chase Simandou if Zanaga is open to investment or a buy out.
I suppose we will have a better idea by August 2nd. If the Chinese bid for Simandou, that would be bad news for us. If they pass, then.......
Yes, if port go ahead is confirmed, this gets very interesting..
Hi atg
Agree re GLEN and 'option value'.
Think we can all agree that GLEN could sell that option for a good deal more now than it could have say 6 months ago ie pre IMF,pre Vale, etc
Greater likelihood of something happening now, at any rate.
ATB
I’m not sure I see it as a lame tweet guys and gals... how can he come out and say... morning we have a jv with a Chinese multi national... if the deal is not quite there... this was some ‘seed’... anyway I’m not here to sell it. It’s for each and every investor to weigh it up... speculative investments come with risk and reward...
It is all about China.. China.. China.. China! They could move and soon, but this wait is enough to drive anyone nuts.