Despite the volatility surrounding iron ore, Centaurus Metals chief executive Darren Gordon sees low cash costs and a manageable capital expenditure target as two of the key factors pushing the company towards the production at its flagship Brazilian project.
The company's bankable feasibility study into the Jambreiro iron ore project in south-east Brazil was released yesterday, with Centaurus pricing the project at $136 million, costs of $16 a tonne and an aim of producing two million tonnes per annum. Despite the project's competitive cash costs and comparatively low capital expenditure to other iron ore projects, Centaurus is now faced with convincing an increasingly cut-throat equity market to trump up $30 million to $40 million, on top of $100 million in debt financing.
The company is aiming for a final investment decision sometime within the March quarter.
Mr Gordon admitted finding a financing arrangement and an appropriate offtake deal would be the company's next major hurdles.
"It's not the greatest commodity to be in at the present point in time," Mr Gordon said.
"A lot of the brokers that had followed us (and) iron ore have come out of the market.
"But when you start putting BFSes like this on the table and you can see the economics of it on top of the returns, opportunity and value will bring people back."
Centaurus, 19.5 per owned by Atlas Iron, has been exploring in Brazil since 2008.
The only other Australian company producing iron ore in the country is NSW-based South American Ferro Metals.Investors reacted negatively to the BFS yesterday, pushing Centauras shares down 2.5¢ to 31¢.
The new magazine for a new generation of West Australians.Click here to download »
All the latest market figures from Australia and the world.Click here »
'The West Australian' is a trademark of West Australian Newspapers Limited 2013.
All rights reserved.
Select your state to see news for your area.