RE: Daemeneng and Ironveld10 Oct 2025 21:14
LT, nice to have someone with well reasoned approach to this investment. I will add my analysis to try and help. Firstly we don’t own the smelter, it has never been passed to us although we have spent on making it good to go. The actual legalities of this are beyond my knowledge, but we have invested in it and can use it. Power in SA is an issue as well. With regard to the mine out agreement, I understand that the perceived cost is £21m over 5 years, or say £4.2m per year. If they mine say 20,000 tons per month, this would be 240,000 per year. At say $60 per ton (got from Chat GPT!) or £40 this equates to around £9.6m income. So on my assumptions (and the assumptions are massive!), this is a profit of around £5m pa to be shared between us and the miners, although we have no idea how much each side gets! Say 50%, gives us £2.5m, less our annual costs, so possibly £1m plus. However should mining be at 30,000 per month or even more, this profit figure increases quickly with our static costs and lower mining costs per ton. The mine has over 50m tons so on 500,000 tons per year the LOM is around 100 years. So all in all if I am in the right ball park, it will make us an awful lot more than the market cap of £7m and will rerate once actual figures are released, if I am anywhere near correct. I am a constant buyer of more shares at the moment. This is not a ramp, there are risks such as my assumptions being wrong, the contract being very different than I have assumed, the price per ton being wrong or changing, the impact of a tariff world of steel and iron on the value of magnetite ore, etc etc. . Hope this helps and any views or obvious errors in my thinking would be welcomed
Sign In
Follow the stocks
