RE:RE:RE:Iron ore numbersNewfNewf wrote: Call up Vale, make a decent deal and let Vale deal with the rest since they are the experts in this area. Pay half the amount received as a special dividend to investors and take the other half to invest in the company.
Vale would seem to be the logical partner in this area wouldn't you think?
Cheers!
Not a bad suggestion at all. I like it. Vale is the largest iron ore supplier in the world and it is located in Brazil. Let’s play a game and imagine a “Take or Pay”arrangement with Vale (or any other major player in the iron ore field) whereas:
They will have exclusivity on our iron ore products
A minimum annual purchase volume must be guaranteed (example 500,000T / year)
They will take possession of our products at our gate
They will get 40% or even 50% discount off the sale prices based on the listed spot prices at the time they take possession of the goods
The terms of the arrangement can be renegotiated on a yearly basis
Let’s assume the following:
Minimum volume = 500,000T / year
Discount = 40%
Average Spot Price over the year for 58%Fe = US$150 / T
Largo’s Profit Margin = 85%
Then
Our Annual Revenue = US$150 x 500,000 = US$75M x 60% = US$45M
Our Annual Profit = US$45M x 85% = US38.3M or US$0.59 / share from the sales of iron ore alone.
(Note: in 2020 Largo had a Net Income of US$6.8M)
In this game our huge 2,000,000 T stockpile would be cleared in 4 years
If a similar deal was announced a 20% jump in sp would be a gross understatement.