BRM - Brockman Resources

[fEkuaR]

huge volumes traded on today's announcement. Any speculation as to why the share price went back to 1.230 on the back of a "positive" announcement?

 

[Amor_Fati]

huge volumes traded on today's announcement. Any speculation as to why the share price went back to 1.230 on the back of a "positive" announcement?

No idea, which makes me a bit nervous. It was a long retreat from the intraday high at $1.39! The fact it jumped shows that it must have beaten expectations so what explains the fall? Hmmm... Market irrationality or someone knows something we don't!

 

[Sean K]

I'm not sure what Capex was expected to be, perhaps that's a bit higher than expected. Big range in costs, $700m - $1.3b. Geesh. Perhaps the large numbers have scared some people off? Going to be a little difficult to get the Capex you'd think, unless they get a big Chinese backer, or a FMG to invest in them. There's going to be significant dilution you'd think.

Opex looks pretty good with IO prices steadying and raising a little it's a profitable operation. Producing 17-20Mt pa. The previous guidance was for a 15Mt pa start up expanding to 25Mt pa, so maybe the long term reduced tonnage was a concern. Not sure how the paybe time and IRR rates on the scale of things. 5 years seems reasonable.

 

[Amor_Fati]

Was that 25mt beneficiated or raw? Because 25mt of ore at 40% is very close to 17mt of beneficiated ore at 60%. Yes the capex is large but if it's a profitable operation then it should not be too hard to raise equity, borrow debt. Especially as you would hope we would have this recession behind us.

 

[Sean K]

Pretty sure it was final product. I can't download their last presentation that had a timeline to production and numbers, as my (stolen) wifi internet connection is dreadfully slow. But if you check you will see it.

Long time till DFS completed. Richards says this time next year on the BRR interview. Long time to wait for any real action on this.

In the news:

Brockman Resources 'on track' to be major
Sarah-Jane Tasker | August 11, 2009
Article from: The Australian

IRON ore hopeful Brockman Resources is on track to become the fourth-largest producer in the Pilbara, after a positive review of its billion-dollar project.

The Perth-based company released a pre-feasibility study on its West Australian project yesterday that suggests it could become a substantial producer in the vibrant iron ore region, with the fourth quarter in 2012 targeted for first production.

The study of its Marillana iron ore project shows that Brockman will be targeting 17 million tonnes a year, making it the fourth-largest producer in the sector dominated by the majors, Rio Tinto, BHP Billiton and Fortescue Metals Group.

The study also found that the upfront capital costs are forecast to range from $705 million to $1.35 billion.

"The pre-feasibility study shows that the Marillana project stands to be a financially rewarding project, with robust operating margins, strong rates of return and simple mining and processing technologies," managing director Wayne Richards said.

"The findings of the study pave the way for the execution of a definitive feasibility study to get under way later this quarter, putting Brockman firmly on track to become a major iron ore producer within the Pilbara."

 

[jonojpsg]

Brockman Resources 'on track' to be major
Sarah-Jane Tasker | August 11, 2009
Article from: The Australian

IRON ore hopeful Brockman Resources is on track to become the fourth-largest producer in the Pilbara, after a positive review of its billion-dollar project.

Not sure how they figure this given that Gindalbie is heading for 30Mt a year?? Are they basing it on start-up tonnages, but even then I think GBG will be ahead of BRM.

 

[Sean K]

Not sure how they figure this given that Gindalbie is heading for 30Mt a year?? Are they basing it on start-up tonnages, but even then I think GBG will be ahead of BRM.

Maybe Sarah-Jane needs to do a little more research.

Did BRM state that anywhere, or just a media error?

 

[Amor_Fati]

Pretty sure it was final product. I can't download their last presentation that had a timeline to production and numbers, as my (stolen) wifi internet connection is dreadfully slow. But if you check you will see it.

Alright mate, it took me a while but I have found something. It is from the presentation to the China Ore Conference and the whole document was pictures, figures and graphs with almost no text so I don't know exactly how this relates the the PFS. There was nothing about mining the DSO anywhere in the PFS was there, just 17mt/year of beneficiated ore? So that's slightly better than expected but where is the DSO production?

 

[Mozart56]

Alright mate, it took me a while but I have found something. It is from the presentation to the China Ore Conference and the whole document was pictures, figures and graphs with almost no text so I don't know exactly how this relates the the PFS. There was nothing about mining the DSO anywhere in the PFS was there, just 17mt/year of beneficiated ore? So that's slightly better than expected but where is the DSO production?

The detrital lies over the top of the DSO, so there is no plan to mine the DSO until the overburden has been processed. This is a good thing, as it saves them having to move the stuff twice. Cost to process is close to mining the DSO anyway given the strip ratios and depth. Final product grading may even be better.

 

[Sean K]

No reason for this to jump yesterday through $1.30 resistance on some increased volume. Interesting. Has been working in waves over the past 6 months and may have just completed another small one before a slight rise and then more consolidation.

Was there another IO takeover rumour or China rumour floating about elsewhere yesterday?

 

[Sean K]

As seen in the IO comparison table, BRM is currently trading at 5c per ton for it's Magnetite equiv alone. Then add in the DSO which could be up to 100Mt on further drilling. On all of the IO companies we have analysed this seems to be the most undervalued on a peer review. However, maybe there's a reason. Big Capex, and if the FMG deal with BCI is an example, they will have to give away 50% of the resource to use their railway. Probably a good plan and I would not be at all surprised if a deal of a similar nature was on the table right now. Might depend on what sort of China/Japanese/Indian interest has been sniffing about.

Chart update to the above and you can see how important the region between $1.25 and $1.50 is. Pretty much the Great Wall. However, that support line looks pretty good. Will be an outstanding longer term breakout if it can finally break through this zone. In the mean time, it's short term ambling sideways, medium term going up.

Was a handy pick up from the support and break up at 50c.

 

[Sean K]

While 1.25-1.50 looks most important to me, the next short term hurdle is 1.39 ish established over the past 3 months. Current gain is not supported by volume so I'm not overly confident this will continue. Chamapgne will be popping on a strong break through $1.50 however. In the mean time, fingers crossed 1.39 ish firms up as support somehow, otherwise the medium term up trend goes into some question. Need to stop this overlapping incimental rise and look more impulsive.

 

[Go Nuke]

While 1.25-1.50 looks most important to me, the next short term hurdle is 1.39 ish established over the past 3 months. Current gain is not supported by volume so I'm not overly confident this will continue. Chamapgne will be popping on a strong break through $1.50 however. In the mean time, fingers crossed 1.39 ish firms up as support somehow, otherwise the medium term up trend goes into some question. Need to stop this overlapping incimental rise and look more impulsive.

I think we might see it touch $1.58 as next resistance.

Been a great few days for BRM hey Kennas.I/O seems to have regained a little favour recently with things lokoing a little brighter than once thought out of China.

The rail deal WITH big the next big thing for BRM and indeed, what will it cost them?
Wish I had the balls to put my money where my mouth is and back my charts..lol :>

 

[Sean K]

Wish I had the balls to put my money where my mouth is and back my charts..lol :>

Me too GN.

I have had 20% on my money sitting on the sidelines waiting for a decent pullback to go all in and start using the banks cash. Complete failure on my judgement of the market and money management skills. Maybe being in Peru has been a stumbling block.

Important issue now for this stock is to judge what is next.

Do they turn into a producer backed by FMG, or into a JV with BHP, or what?

Or, do IO prices crumble into oblivian and they turn into crap!!!



Still a trading stock imo.

 

[Mozart56]

As seen in the IO comparison table, BRM is currently trading at 5c per ton for it's Magnetite equiv alone. Then add in the DSO which could be up to 100Mt on further drilling. On all of the IO companies we have analysed this seems to be the most undervalued on a peer review. ...

Hi Kennas - BRM does not have any Magnetite, and it would wrong to class their detrital as equivalent to Magnetite. It is all haematite and according to the PFS costs around $31-$32/t to process and transport which is comparable to many DSO operations. This is because the detrital is all free dig and does not require any blasting.

 

[Sean K]

Hi Kennas - BRM does not have any Magnetite, and it would wrong to class their detrital as equivalent to Magnetite. It is all haematite and according to the PFS costs around $31-$32/t to process and transport which is comparable to many DSO operations. This is because the detrital is all free dig and does not require any blasting.

They only have 50 or so million tons of DSO which is deep. The detrital ore covering it requires beneficiation. If it was all hematite DSO the company would be worth billions. I've left it's Detrital Ore in the Mag column as it's value would be more like Mag than DSO. You think it's worth the same as DSO? ie, well over 55% fe? Opex might be $32 ish as they say, but Capex of $700k - $1.35B, is part due to the requirement for beneficiation. The 2 x 18Mtpa plants will not come free. In fact I think they will cost about $532m. This must be considered when valuing the deposit. Maybe we need another column for beneficiated hematite?

 

[Sean K]

Made it's way through the resistance yesterday but dropped back. Going to open up about $1.50 at this stage, will be a real test around these levels.

Harry is telling me that this wasn't a bad pick up under cash backing back at 50c ish. What an opportunity!!! I was hoping we might see something crazy like that again, but it looks like the craziness is going in the opposite direction. Damn it.

On the IO junior comparison table, if you apply the average for DSO and Mag to this, it should be trading between $1.2 -$1.6b mc. Or, a share price between $9.55 - $12.50 ish.

 

[swm79]

Me too GN.

I have had 20% on my money sitting on the sidelines waiting for a decent pullback to go all in and start using the banks cash. Complete failure on my judgement of the market and money management skills. Maybe being in Peru has been a stumbling block.

Important issue now for this stock is to judge what is next.

Do they turn into a producer backed by FMG, or into a JV with BHP, or what?

Or, do IO prices crumble into oblivian and they turn into crap!!!



Still a trading stock imo.

i'd like to put some money where my mouth is on this one too.

maybe they'll merge with one or (ultimately all) of the North West Ore Alliance.... i'd like to have some spare cash in all four of them - was in them a while ago, but had to get out for the SPP of AIO... some much for that!!!

 

[Sean K]

i'd like to put some money where my mouth is on this one too.

maybe they'll merge with one or (ultimately all) of the North West Ore Alliance.... i'd like to have some spare cash in all four of them - was in them a while ago, but had to get out for the SPP of AIO... some much for that!!!

There must be some consolidation amongst this group. At least a couple of them should merge. Not sure who has the best synagies. FRS and BRM look to be the cheapest.

 

[swm79]

There must be some consolidation amongst this group. At least a couple of them should merge. Not sure who has the best synagies. FRS and BRM look to be the cheapest.

BCI was cheap back in May when i was holding at $0.50 until i stupidly got out at $0.64

true, i think we'll see quite a bit of consolidation with these guys. maybe a full take on BCI by FMG will get the others moving?

but i read that by 2013 these guys will (approx) be producing around 50 mil t between them - same as FMG's first stage existing ops