The company is targeting an initial steady production rate of 200,000 beneficiated tonnes per annum from the first phase of operations at the Kurnool stockyard, with beneficiated grades of up to 58% achieved last month.
A 58% iron ore product sells domestically for about US$90 per tonne, meaning that at 200,000 tonnes per annum production, NSL is looking at first phase revenue of $18 million.
In Phase 2 of the project, NSL aims to ramp up production to 400,000 tonnes per annum at higher grades of between 58% and 62% iron.
Given the strength of the domestic Indian iron ore market in both demand and pricing, NSL has said it may prioritise domestic sales at the gate ahead of export opportunities.
NSL managing director Cedric Goode said the company was only just beginning its journey, with an aim of achieving production of 1.5 million tonnes per annum by the end of 2014.
"This target [is] possible through bolt on wet and dry separation plants and increase output, together with sourcing additional ore feed through strategic acquisitions and supply agreements," Goode said.
"With the increase in funds being allocated to infrastructure projects, Indian domestic steel production is expected to increase from 77 million tonnes to 200 million tonnes by 2020. The company looks forward to making its contribution as part of this growth."
NSL is the only foreign company to own and operate iron ore mines in India.
The Kurnool stockyard in southeast India is a 12 acre industrial site located adjacent to NSL's existing Kuja iron mine in Andhra Pradesh. The stockyard will source its iron from the nearby Mangal iron ore mine.
Construction and commissioning is continuing on the Phase 1 Kurnool iron ore dry separation plant, with final commissioning on track to occur prior to June 30, 2012.
The Phase 2 wet beneficiation plant will be brought into operation later in 2012, with sales anticipated in the first half of 2013.
Potential for Growth
NSL is continuing to assess complementary new bulk commodity mining opportunities to expand its potential production base in Andhra Pradesh.
Late last year the company was continuing to progress several opportunities for either outright acquisition and/or joint venture structured agreements over multiple projects across India, together with additional Australian coal tenements.
The company's dual bulk commodity focus provides it with the opportunity to link its maiden iron ore start-up operations and first revenues with its exploration and development of the Queensland thermal coal assets.
This is a significant milestone in terms of ex gate sales of iron ore into the Indian domestic market, driving near term cash flows and given its valuation of $21 million and highlights the valuation gap.
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