Our Strategic Approach
NSL continues to develop its bulk mineral commodities exploration, development and growth strategy, with emphasis on Indian iron ore and south Queensland thermal coal opportunities. The Company has established five key parameters to build shareholder value around cost competitive bulk mineral sales exports in the high demand commodity areas of iron ore and thermal coal.
No junior resources developer should, however, focus all of their resources into a single market or commodity. Encouraged by our Indian alliances, NSL moved into Queensland’s bulk commodities market, focussing on thermal coal opportunities, a commodity that is well understood by domestic and international consumers, joint venture partners, financiers and the equities market.
Our entry has been at low cost but with strong upside. The early period has serviced the requirements of applications and approvals necessary before exploration can commence. Three of the four tenements have been granted to date.
The Company achieved the construction, commissioning and expansion of its Phase One dry separation plant, culminating in the material produced during the commissioning phase being sold ex mine gate into the domestic Indian market. NSL is the only foreign company to own and operate iron mines in India.
With significant investment to be made in upgrading India's infrastructure in the next 10 years (estimated to be US$1.7 trillion), India's Government is taking various steps to further encourage private and foreign investments. NSL is positioned to be part of that growth plan – a plan which has to service strong domestic consumption, higher workforce numbers, and emerging middle classes. India's wealthiest consumers (those earning US$1m or more in PPP terms) will increase by 40 million in the next 10 years!
India is the world’s 4th largest steel producer, India’s iron ore market, though large, is fragmented, with many small-scale operations. As a participant in the local market, India’s economic growth and stability therefore favours NSL’s long-term presence in India and provides leverage to attractive iron ore prices, both domestic and export, while it can also leverage its cash flow and asset base in line with India’s economic growth.
While its iron ore sector remains fragmented, the country does offer low cost iron ore production potential underpinned by globally competitive labour costs and in situ road, rail and export port infrastructure. This is particularly the case in our current production footprint, the south eastern coastal state of Andhra Pradesh.
India offers untapped potential for Australian investors, with NSL the only foreign company to own and operate iron mines in India. The Company has achieved the construction, commissioning and expansion of its Phase One Kurnool iron ore dry separation plant in the southeast Indian state of Andhra Pradesh, culminating in the material produced during the commissioning phase being sold ex mine gate into the domestic Indian market.
Consolidate through beneficiation scale-up:
India’s fragmented iron ore sector offers NSL many small- scale opportunities for 3rd party processing through our Kurnool iron ore beneficiation plant. In the longer term, we can develop this facility as a pivot point for leveraging our iron ore interests across multiple projects and eventually into pellets, a production profile offering significant profit advantages.
Target global growth opportunities:
Our Kurnool plant and expanding iron ore mine assets in India are readily accessible to both domestic and global iron ore consumers in the Asian and Sino regions. India’s own forecast year-on-year growth rate is expected to result in domestic steel capacity increasing from 77 million tonnes in 2010 to 200 million tonnes in 2020. These factors only serve to further enhance supply opportunities for NSL.
Queensland thermal coal:
NSL’s four thermal coal tenements, EPC 2198, 2336, 2337 and 2338, cover 2,585 km² in the Eromanga Basin in southwest Queensland and are adjacent to similar projects held by East Energy Resources (ASX: EER, Inferred Resource of 1.74 Billion Tonnes) and International Coal Limited (ASX: ICX, Inferred Resource of 1.2 Billion Tonnes).
As previously announced, independent geologists have estimated a combined exploration target of between 6.6 billion and 18.7 billion tonnes of shallow based thermal coal for the four tenements.
There remains the potential to leverage our growing Indian commodities market knowledge and that country’s strong thermal coal demand, into future Joint Venture and offtake agreements for these Queensland thermal coal assets.