Another iron ore junior bites the dust under high debt load of +600 M USD in bank debt and convertibles and a mine on care and maintenance due to low prices and disputes with Chinese partner. This project had some of the lowest cash costs in the junior iron sector and had made the hurdle into production, yet even so the scale of capital investment and the associated debt load proved too much in the “return to normal” of iron ore pricing. This raises serious questions about market optimism, business models, reasonable pricing and whether small companies really have the resources to develop and operate capital projects of this scale.
Following in Zambia’s footsteps??
Barrick recorded another $3.4 billion in after tax impairments for 2014, giving $2.9 billion in losses for the year. On the back of large write downs for Cerro Casale (Permitting and Capital Cost issues) and Lumwana (Zambian export tax and Low grades/copper prices). These writedowns are reflecting challenges in stakeholder engagement and jurisdiction rather than operational issues, though they lost another 11.1 million oz’s off the reserve list due to mining and divestitures. Whats going to happen with Pascua de Llama?
This compares to 2013 when they recorded a whopping net loss of $10.37 billion ($10.14 per share), including after-tax impairment charges of $11.54 billion. These impairments were largely driven by the price crash in gold and recalculations of reserves, with 36 million oz’s of gold disappearing from the books.
The miracle material is about to be scaled up to commercial production – very interesting to see what current industrial demand is outside labs – if they can succeed in producing a high quality product.
I wonder how this will play out? Is it worth a 30% increase in the stock?
A good summary of methane hydrates. The focus for research interest should be in near surface hydrates beneath permafrost which are in danger of releasing into the atmosphere. Could these deposits be harvested before natural release?
If this can be commercialised the whole electric car thing – becomes a reality fast!
Registration of coal exporters in Indonesia must be complete by today to maintain export licences. Aimed at stamping out illegal mining and getting full royalties and taxes to the government, comes in effect today and could restrict up to 25% of coal exports in the short term of a $7 billion a year industry.
Cost of making a US Penny is down from 2.4 c to 1.6 c, but US mint making a loss of $45 million on production of $7.5 billion pennies this year. If zinc goes up further this will increase.
I think they will say goodbye to the penny soon.
One of the more high profile Iron Ore junior collapses to date, look for more as the Iron Ore party finally grinds to a halt. Massive multi-billion dollar infrastructure expansions by the big three + fortescue have bought a veritable flood of direct shipping iron ore to the market. Lookout the magnetite producers, as they will find it very difficult to compete in this environment.