RE: Tomorrow3 Jan 2022 10:47
Of course anything of this nature carries risks, I believe our management have done their best to manage this and it’s great that we have multiple assets in different commodities but of course some things are out of their hands. My opinion is that the share price is steeply discounted from my risked valuations so it offers an attractive risk reward ratio at this price.
A few thoughts:
This was once an operating mine, the blueprint is already there, the restart costs are only a small fraction of what building a new mine would cost. Our management have had two years to assess the project and it’s risks and believe it is transformational for the company.
The local government are already working on re-homing those living on the line so that is not a concern for me personally. There was a recent news article on this and a 30m boundary being established along the line.
Iron Ore is forecast to go higher, the recent fall is due to China’s production curbs, ultimately it will fluctuate over the life of the mine.
Lithium and Tin are off the charts, this is the beauty of the multi asset strategy that we have.
Commodities are generally great to hold during inflation as they tend to go up in line.
Thoughts on recessions - this would affect any share, nobody knows but my feeling is the Biden’s stimulus will keep things going and long term iron ore demand is predicted to continue rising as poorer countries build out their infrastructure.
Generally the sentiment with stocks has been TINA There Is No Alternative asset class to get a decent return.
On capex - the BRL exchange rate has moved in our favour, capex could actually be lower but the reduction in debts to 45% has also helped a lot. Our management have had access to the experts and been conducting the PFS for several months now so I’m not expecting any huge surprises that would cause a problem to the economics of the project.
The local government understands how big of a deal this is to the local economy and will be extremely supportive.
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