Interesting news from Down Under, as Carpentaria Exploration (ASX:CAP) still seems to be moving ahead with the Hawsons Iron project in Australia, despite the extreme volatility on the iron ore markets. According to the company, additional test work has indicated the company’s Supergrade product is amongst the best iron ore pellet feeds, due to the low slag and high iron content, as well as additional iron making characteristics. The company estimates the 1.77 billion tonnes of iron ore could be sufficient to produce approximately 263 million tonnes of concentrate at an average grade of almost 70% Fe.
What’s interesting for Carpentaria (and its shareholders), is the fact the Supergrade product is able to improve the characteristics of the iron ore and steel when being blend with the ‘normal’ Chinese pellets. Due to these superior characteristics, Hawsons Supergrade ore could command a price of up to $40/t higher than the benchmark iron ore price, and that would make this project profitable, even at $40 iron ore, but the main question mark will be to find out what the return on the investment will be, considering the initial capital expenditures will be quite high.
That being said, the company has just signed a Letter Of Intent with Bahrain Steel for an offtake agreement of 3 million tonnes of Hawsons’ supergrade product on an annual basis. Bahrain Steel is one of the largest producers of iron ore pellets in the world, and with this new deal, Carpentaria has now entered into offtake agreements for about 40% of its anticipated production rate.
Go to Carpentaria’s website
The author has no position in Carpentaria Exploration. Please read the disclaimer
