BRM - Brockman Resources

[INORE]

part of bhp's rgp5 expansion is to duplicate the rail from yandi to port...this will have to help brockmans case to jump on board...

BHP Billiton Approves Funding For Accelerated Growth At Western Australia Iron Ore4 February 2008
Number 05/08

BHP Billiton today announced approval for US$1.094 billion (BHP Billiton share US$930M)(1) of capital expenditure to underpin accelerated growth of our WAIO business. This amount represents pre approval expenditure for Rapid Growth Project 5 (RGP5). RGP5 is expected to increase WAIO’s installed capacity to more than 200 million tonnes per annum (Mtpa) during calendar year 2011.

This pre-approval funding will be used to commence duplication of the railway track between the Yandi mine and Port Hedland and begin the expansion of the inner harbour at Port Hedland. Construction of this second railway is expected to begin in May 2008, subject to various government approvals. The early funding will also allow early procurement of long lead items and detailed engineering studies to expand capacity at Yandi and Area C.

President BHP Billiton Iron Ore, Ian Ashby said "The core of the Pilbara is progressively moving to the Yandi/Area C mining hubs. Double tracking the rail to this area will create the rail capacity to support our planned expansion to more than 300 Mtpa.

 

[kransky]

Business is like war without the blood (most of the time)

BHP have been trying to fight off the newcomers to the Fe scene by not wanting to let them use their rail.

What generally happens when a company wants to build a long railroad from a mine to a port. Surely they dont have to buy up all the land along the way.

Use of crown land surely means the rail lines should be used by others. And BHP could be compensated with a return on some of their costs in building the line by the newcomers.. simple.. for the Good of Australia not just BHP shareholders.

<end rant>

 

[grace]

MD said a fund from New York had been buying up + a well known Australian identity. AFR speculates that it could be Packer as he took up some of the placement at 95c (and this fits with MD comments).

 

[Snakey]

Buyers have nearly regained control 152 v 182 so few share available large movements up and down will be expected bought top up parcel this morning at open 2.04 now think we will see the retest now buyers160 v 183sellers. buyers building
market cap 186 mil for jorc 1 billion tonnes fdl 100 mil for 300 million tonne TARGET

 

[Sean K]

market cap 186 mil for jorc 1 billion tonnes fdl 100 mil for 300 million tonne TARGET

I think it's fair to do a peer comparison with other wannabe iron ore miners although you have to ask yourself if FDL is overvalued. Personally I think it is, but by how much makes it hard to do a direct comparison. Also, you need to check what the target is. Is it all DSO? Everyone needs to do a recheck of what BRM's 1.1Bt is made up of. You'll find just a small % is DSO. Then you need to question the Magnetite and the other metals to see how easy it's going to be to convert. Has anyone looked at that yet? Just food for thought. Just trying to add some sanity to the blanket 1.1Bt fe claims and comparisons to FMGs and the like.

 

[Snakey]

I think it's fair to do a peer comparison with other wannabe iron ore miners although you have to ask yourself if FDL is overvalued. Personally I think it is, but by how much makes it hard to do a direct comparison. Also, you need to check what the target is. Is it all DSO? Everyone needs to do a recheck of what BRM's 1.1Bt is made up of. You'll find just a small % is DSO. Then you need to question the Magnetite and the other metals to see how easy it's going to be to convert. Has anyone looked at that yet? Just food for thought. Just trying to add some sanity to the blanket 1.1Bt fe claims and comparisons to FMGs and the like.

Hers a snip of their presentation:
Marillana –Haematitic Detrital Processing Methodology

Simple Gravity Separation Flow sheet constituting Crushing, Heavy Media separation, jigs, cyclones and/or spirals

Beneficiation Plants have been designed and operated at various mines throughout Western Australia –including BHPBilliton’s -Mt Whaleback and Finucane Island, Rio Tinto’s –Brockman 2 deposit, Tom Price and Paraburdoo Projects

Technology is well proven –low technical risk

Low capital, operating and energy costs associated with processing of Detrital ores

No secondary, tertiary or quaternary crushing /grinding required

Product suitable for direct Sinter or Blast Furnace feed

 

[juw177]

Hey Snakey, you still havent answered my last post... you keep quoting things like 1b tonnes and news releases. But what is your take on all that and does it address the issues that me and Kennas pointed out?

 

[JMcDog]

As much as many ASF members are not great fans of HC, there are a couple of posts that are worth a read on this subject.... and/or read the posts around them if you can put up with the copious rubbish posts too!!!

A poster "uio" put up a post on "io experts" (a BRM thread) at 18:20 on 6/3/2008..... and subsequently a poster "needle" responded point by point under "focusing on the negatives such as uio" thread at 21:10 on 6/3/2008.

I believe both these posters are very switched on re iron ore.... a good starting point at the very least in your research.

Cheers, MF

 

[Snakey]

Hey Snakey, you still havent answered my last post... you keep quoting things like 1b tonnes and news releases. But what is your take on all that and does it address the issues that me and Kennas pointed out?

Processing is inexpensive and common. the things I have stated are the facts. I think their still undervalued. lets be conservative say they only have 250 million tonnes at one dollar a tonne (very very cheap for jorc compliant resource because of mining issues, processing, depth,etc) thats a market cap of 250 million or roughly $3 a share. where dont you see value????
FDl say over valued say worth 5 cents at market cap 50 million for a target not a jorc a TARGET of 250 million tonnes 20 cents a tonne for something they think might be there and with fdl history They think a lot of things that aren't true from my experience.

 

[pajm]

Shares holding well this pm (last 2.32) with such a debacle overall today. Be nice if they can hold these levels with all the storms about.

 

[grace]

There was a wall sitting at $2.50 which seems to have been removed. Someone accumulating perhaps... Hopefully we'll see $3 again.

 

[agro]

speculation about James Packer on the register considering he aided a capital raising for FMG by purchasing shares at $34 prior to split

Offshore buyers lift Brockman


OFFSHORE buying of scrip in junior iron ore hopeful Brockman Resources lifted the Perth-based company's share price 165 per cent yesterday.

Demand for Brockman shares surged immediately after it released an updated resource of 1.1billion tonnes for its key Marillana project in the Pilbara with an indicated resource of 338 million tonnes.

The project borders tenements controlled by BHP Billiton and Fortescue Metals, and contains the relatively lower-grade Brockman mineral hematite resource.

Previously an unloved style of mineralisation, Fortescue and Rio Tinto have made recent noise about the size of Brockman-style ore they control as Chinese steel mills look to get their hands on Australian iron ore.

According to Brockman Resources, its hematite ore could be upgraded through beneficiation to about 59 per cent, although analysts noted the high amounts of alumina in the ore and the high mining and processing costs of about $36 a tonne double that of what Fortescue and BHP Billiton face.

Managing director Wayne Richards said Marillana had the potential to deliver 550 million tonnes of iron ore over a project life of up to 50 years.

But the company is yet to agree to any agreements on how it will get its product to port, although Marillana is close to BHP Billiton's Newman railway. Mr Richards said that although a New York-based fund had been scooping up as many shares on issue, so too had a "well known" Australian identity.

Brockman shares lifted $1.87 in trading yesterday to close at $3.

"This person is someone who partook in the placement we had in November and is a very good person to have on the share register," Mr Richards said.

Brockman is expected to begin a pre-feasibility study for Marillana in June and is likely to combine that with a feasibility study.

The company is eyeing a start-up date around late 2011 and may upgrade its studies to include a production rate above the 10 million tonnes a year it has already mooted.

 

[juw177]

Interesting article.

although analysts noted the high amounts of alumina in the ore and the high mining and processing costs of about $36 a tonne double that of what Fortescue and BHP Billiton face.

Processing is inexpensive and common..... How hard is $1 dollar a tonne to understand???

Snakey, so does that change your valuation of $1 a tonne? Does that make -$35 a tonne?

And back to the topic, besides mining and processing what else will affect the value that goes into each tonne of a resource estimate? There are transportation and certain risks to consider right?

We see rampers on many resource stocks saying things like 1bn tonnes = next Fortescue as if everything was so simple. Can anyone shed more light on this topic?

 

[pajm]

I would be really interested YT on your thoughts with latest developments with BRM, given your historical input. I bought my first lot in Oct. Sounds like the little one has graduated and left home for Uni.!

 

[enigmatic]

I did a quick but small digging arround and found that in May 2007 the avg price of Iron Ore in china was 97 to 113 USD per tonne. obviously the comparison of that time can not be made as shipping cost may of been cheaper and the USD stronger(please correct me if I'm wrong)
however Vale has recently signed with Baostell Group for a 65% increase in the price of its Iron. 160 - 185.

After reading up a little i found shipping iron ore to china from australia ranges from $15-$25 a tonne doubling that to be conservative lets make it $50

not a hundred percent sure how much an entire plant would cost or if they would even build one but lets say they decide to and lets put a high price on it 3billion. current FMG is arround 2.7Billion from memory could be wrong

Using the low end of the price they may get for it $160 a tonne and not considering any possible price increases or decreases in Iron ore we have the following figures.

$160\t -$50\t -$5.5\t - $55\t = $49.5\t

$160\t price of iron ore
$50\t cost of shipping ore
$5.5\t cost to set up plant
$55\t cost for operation life of 50 years ($600million a year please correct me as this number i believe is a little excessive)

so basically that has left us with close to $50 dollars a tonne. excluding risk capital raising, changes in current economic climate, USD, oil prices, price of Iron ore and many other factors effecting the chances of success and profit.
Any how i believe someone estimating that they could get $1 a tonne from either setting up there own plant or by selling either all or part of their resources to FMG or BHP wouldnt be to far fetched.

However this is only my personal opinion and in the above analysis i have used minimal values for income and what i believe are maximum for cost. please correct me if i have under stated any cost or income or possibly overstated cost of income.
DYOR

 

[Fed23]

What happened to my last post on here?

It's down 12%, this just panic selling? Doesnt the market care that it's got 1.1billion of iron ore?

 

[Crash]

The market cared last week, today it doesn't care so much. Theres plenty out there keen to take a profit. If you think that it's being considerably undervalued you may want to up your holding.

 

[grace]

I have been watching the depth a bit today. Accumulating going on. Sellers putting in large sell orders, forcing price down, then they disappear. Although dissapointing the share price goes down, good sign they are filling up.

 

[Fed23]

Grace are you still holding?

I have been waiting for the share price to start going up before I consider topping up my holdings

 

[grace]

Grace are you still holding?

I have been waiting for the share price to start going up before I consider topping up my holdings

Yes, still holding. Mining study is due end of March so I'll wait and see how that looks. Very large volume at the moment. Also, iron ore prices will be locked in April and no reason to think that will be bad. I was surprised to see it down today though. We might see a substancial holder soon with all of this turnover???????

I'm a medium term holder - not good at day trading.

MD working on rail deal. When (and I'll add if) that comes through, this will be rerated. Will lower risk and more buyers will come in.