Advanced Explorations Inc. ADEXF

Shipping Issues

[greenandgold]

1) Why was AXI flirting with the unproven Kobe Steel iron ore nugget producing technology in the first place? This is very new technology, a demonstration project just went online March of this year at Mesabi Nugget. Most companies avoid the uncertainty of unproven technology because of the possibility of capex overruns or unanticipated operational issues; they usually want a proven economic model before committing to a project. AXI had to consider the nugget procedure because they wanted to avoid the even more difficult issue of shipping bulk commodities in Arctic conditions (nuggets are shipped in smaller quantities than ore).
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2) Again, scale is being ignored. Vale at Voisey's Bay had Umiak 1, an ice-breaking bulk carrier, specially built to deal with year-round shipping in Arctic conditions. It carries 31,992 tonnes and makes 12 trips a year (transporting roughly 360,000 tonnes of nickel concentrate per year). Small fries compared to iron ore requirements. Under AXI's new plan to ship 5 million tonnes of iron ore concentrate per year, a Very Large Bulk Carrier (VLBC) carrying at least 200,000 tonnes will be required to make the economics work (these are HUGE ships, bigger than the typical capesize, which hauls 80,000 tonnes or more). A 200,000 tonnes capacity VLBC  would have to make 25 trips per year to ship 5 million tonnes of concentrate, which would seem to require a year-round shipping schedule.
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3) A year-round shipping schedule requires the VLBC to be an ice-breaker. Does an ice-breaking bulk carrier ship, with the capacity to handle 200,000 tonnes or more, even exist? The folks at Mary River are planning to build VLBC's with Finnish "azipod" ice-breaking technology. But Mary River is far from proven. Right now it is an expensive project, not an economic mine. 
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4) See a theme here? Iron ore nuggets: unproven. Very Large Bulk Carriers with Arctic ice-breaking technology: unproven. A bulk commodity mine in the Arctic built with modular components: unproven. Roche Bay could become a successful mine, and investors may make fortunes, but Herculean obstacles will have to be overcome.