RE:Mengaper Iron ore productionThe profit sharing agreement signed with Malaco was as follows..
Under the Agreement, Malaco has confirmed MMSB’s previously-granted right to access, extract, process and sell the oxide magnetite materials on the Area C overburden according to MMSB’s mine plan and has agreed on a profit-sharing arrangement for that overburden material.
Under the profit-sharing arrangement Malaco will receive, based on a sliding scale profit sharing arrangement, a share of profit up to US$5.00 per tonne of Area C marketable grade magnetite delivered and sold by MMSB at the near-by Kuantan port. However, no profit-sharing payment will be payable to Malaco on the first US$10.0 million net profits generated from the sales of marketable grade magnetite production from the Area C overburden.
In addition, Malaco has agreed to sell to MMSB approximately 1.2 million tonnes of stockpiled oxide magnetite top soils. This stockpiled material is intended to be used as initial inventory for approximately the first year of magnetite production at the processing plant to be constructed by Monument by Monument, as described below. The stockpiled materials are not subject to any profit-sharing arrangement with Malaco.
Malaco mined just over 2.5 m tons in 2011-12 according to the technical report.
If one assumes that at $125 US per ton, open pit mining of oxide magnetite should be very profitable.
Assuming this amount of annual production, Monument would get up to $15 million US per year as its share of the profits ( $10 m carried plus a one time $5 m ).
Freddy is investigating cash costs so this estimate could be improved..