Centaurus Metals (ASX: CTM) has entered into a Memorandum of Understanding (MOU) with the State of Minas Gerais in south-east Brazil and a group of key State Departments.
The importance of the agreement is that it will result in the provision of important fiscal concessions and project facilitation benefits for the development of the company's flagship Jambreiro Iron Ore Project.
Centaurus said that the project facilitation arrangements encompass important tax concessions relating to key capital and operating inputs for the project.
Concessions encompassed within the MOU are initially expected to deliver capital cost savings of A$4 million to A$5 million, with the company adding that the MOU reflects the strong relationship which Centaurus has developed with the State Government in Minas Gerais, as well as with local communities and municipalities.
The Jambreiro Project is to result in a A$136 million investment by Centaurus in the State and the creation of more than 1,000 direct/indirect jobs during construction and around 300 direct and 200 indirect jobs during steady state operations.
Jambreiro main points: A low-cost, high-margin project
Bankable Feasibility Study – November 2012:
- Production: 2Mtpa at 64.5% Fe
- Life-of-Mine Revenue: A$847M
- Operating costs: A$16.20/tonne
- EBITDA: A$556M, annual cash flows: A$62M
- Post-tax NPV: A$140M, IRR: 33%
- Pre-production CAPEX: A$136M
Worth noting:
- Consistent and reliable supplier of high-quality, low impurity iron ore to domestic steel mills;
- Approvals on schedule: construction April 2013, first ore production December 2013;
- Friable Ore Reserve: 48.5Mt at 28.1% Fe, 18Mt of high grade product = 9 year mine life;
- Exceptional production and mine life upside.
Valuation
Based on last night closing price, Centaurus has a market cap. of around $59 million, and with close to $29 million in cash, the company has an Enterprise Value of $30 million.
The Jambreiro plan is for a 2Mtpa domestic production to commence by the December quarter of 2013, with a BFS confirming a life-of-mine revenue of A$847 million, EBITDA of A$556 million, NPV of A$140 million.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.