Stock in Macarthur Minerals (TSX:T.MMS
, Stock Forum
) dropped 26% Thursday despite the release of adjusted cost estimates, reflecting lower opex and capex totals associated with getting its Ularring hematite project to production.
Having experienced an unexplained share jump of over 100% since January 1, from $0.15 to more than $0.30, with no news to explain it, the Thursday dumping of Macarthur shares may indicate the anonymous market movers have now left the play.
The adjusted cost estimates conclude, “Based on ongoing work conducted on the Project, Macarthur has and continues to re-evaluate the development of the Project and has identified certain elements of the 2012 PFS that have been revised, including:
reducing the estimated operating cost to A$68/tonne ("t") shipped free on board ("FOB");
increasing annual production tonnage from 2 Mtpa to 4 Mtpa;
the development of a dedicated private haul road route for which the Company has secured tenure; and
a new, larger rail siding site awaiting new tenure to be granted to the Company at Menzies.
In addition, “Further, metallurgical testing and ore characterisation work undertaken by Macarthur during 2013 has also opened up the possibility for those iron ore resources that are more amenable to gravity separation (i.e. haematitic ores) to be mined and processed separately to the geothitic ores that beneficiate best from a magnetic separation. Such an approach during the first 2-3 years of mine production could result in lower capital and/or operating costs compared to those identified in the 2012 PFS.”
The corporate update and cost adjustments were certainly not poor news for the company, which hopes to be ready for production in Q1 or Q2 of 2015.
The company has said previously that project financing has been hindered
to date by the prevailing long term iron ore forecast by resource analysts, lack of clarity around the Government's ability to attract private sector interest to design, build and operate a new MUIOF at the Port; and higher operational costs for the Ularring Hematite Project based on the 2012 PFS.
The announcement Thursday of lower opex and capex costs is therefore a significant step forward.
Macarthur Minerals enjoys a market cap of just $9.6 milion on 44.8 million shares outstanding.