A great post. Orders and Production and the platform has been...

First 82 Last

Share
Profile

Follow
mulac1

1,581 Posts.

311

06/06/17

21:12

Post #: 25134708
Share

Originally posted by Lazarus65 ↑

It certainly is a step in the right direction. It was quite clear that the skepticism in the market was on the ability to produce. The market did not seem to care for the distinction between the grade of the orders (63%Fe) versus the nameplate capability of the plant as designed (58-62%Fe). You certainly should be aware of that sentiment.

The company went about initiating a process to upgrade its plant (via EPC partner, Xinhai) to produce at 63-65%Fe, and in the interim, structured a deal with IFO to produce the higher grade output (63%Fe) using high grade infeed provided by the customer. While there is no clarity on the margin impact of such a temporary measure, it is IMO intrinsically irrelevant. This is a stop gap measure. Even then, based on market prices of high grade in-feed (50%Fe), it is highly unlikely to have raised costs by more than $13 per tonne of output - which is the increased revenue they are getting by selling it at 63% output. So while we do not know conclusively, a learned chap proclaiming to be a professional investor, such as yourself, should be able to work out that it can not be worse than what was originally modeled (in margin terms).

BUT SO WHAT? The purpose of fulfilling the IFO order in this way was to confirm to a skeptical market that we are now fully set up to be an iron ore producer in India. It has addressed questions as to whether this was a scam; whether we were being played by bigger domestic forces; whether this was a rinse and repeat of previous attempts by the company; whether it was just too difficult etc etc. Those questions have been answered. All systems go, working 24 x 7, and now working on optimising the plant to produce at a higher rate with regular grade infeed, and hence even higher margins.

Expand

A great post.

Orders and Production and the platform has been laid for the success of NSL as a producer at a decent margin. I look forward to the growth of this early start up company.

Cheers
Mulac 1

NSL Price at posting: 3.2¢ Sentiment: Buy Disclosure: Held
6 Upvote

0 Great analysis

Reply