Until I hear otherwise, reasons to be positive on LBRMF from company's own MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2022 Dated: November 10, 2022
The Houston Project offers low technical risk, with only building a short gravel road and rail siding as the principal construction components. The Houston Project’s deposits 1 and 2 have undergone extensive regulatory review and approval and are considered ready for construction with a one-year construction period to production. Planned operations will involve conventional open pit truck and shovel activities and simple dry crushing and screening for processing.
LIM is advancing development of the Houston Project through a number of initiatives, including: discussing an offtake agreement, including construction financing and product sale components with a potential off-take partner; advancing commercial negotiations with construction contractors, equipment vendors, rail, port and logistics counterparties; and planning metallurgical test work of drill core collected from the Houston Project in a 2013 bulk sample, to refine the product characterization and specifications which will be helpful in marketing the iron ore.
Based on the assumptions used, the PEA estimates the Houston Project will generate an undiscounted net cash flow of $234 million and an after-tax net present value at an 8% discount rate (“NPV8%”) of $109 million and an after-tax internal rate of return (“IRR”) of 39%, under the base case US$90/dmt (62% Fe Sinter Fines CFR China basis) benchmark pricing model.
If Scully does not complete the investment, the Investment Agreement will be terminated and the proposed transactions with Scully will not take place. The Company is exploring various financing alternatives, including a potential private placement of equity.
