Little Centaurus Offers Big Leverage To Booming Iron Ore Price

The trickledown effect of the surge in iron ore prices in response to Vale’s January 25 tailings dam disaster is starting to take effect.

Project proposals consigned to history when iron ore prices tanked some years back are being dusted off in the hope that the $US100/t prices are here to stay for the foreseeable future.

It is something the big producers Rio Tinto and BHP fear could eventually undercut prices for the long-term as the pesky new producers stick around in the more sedate iron ore pricing expected to prevail in two to three years’ time when Vale gets back to its annual 400mtpa run rate.

But they don’t need to worry about Centaurus (CTM) with its boutique plan to get into production at its Jambreiro project in project in Minas Gerais state, also home to Vale’s tragically deadly Brumadinho operation.

Jambreiro is being dusted off as a potential 1mpta operation. It might be immaterial in scale to both the Brazilian domestic market and the global seaborne market, but it could be very material to Centuarus with its 0.8c share price and $22m market cap.

Centaurus was a 0.5c stock at the start at the month so in percentage terms at least, the highest iron ore prices in five years has been more material to its shareholders than the big producers.

Centaurus has long been a Brazilian specialist and before the recent spike in iron ore prices, it had shifted its focus from Jambreiro to the Carajas where it has nickel and copper/gold interests that more than cover its current market cap.

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Barry Fitzgerald

About Barry Fitzgerald

Barry Fitzgerald has covered the resources industry for 30 years. His column highlights the issues, opportunities and challenges for small and mid-cap resources stocks - most recently penned his column for The Australian newspaper and before that, The Age.

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