broker coverage - 35c target, page-3

Thanks for posting L1.

Great to see the comparisons to EQX and AKI, which many of us here have been banging an about previously.

Looking at an AKI type scenario, based on $367m (as they got $338m for 92% owned project). Assuming also that EIO raise approximately $20m at the 35c target in October (after JORC is released), adds a further 57m shares to take it to 297m, plus about another 15m options, so all up 312m shares. Into $367m that would be almost $1.20 per share.

This is also the first time we have been given figures for royalties (4%), tax (35%) and depreciation (95% in first year). The first 2 figures are standard fair but certainly the depreciation allowance is a massive tick as the reports mentions. Even at just 2Mt in year 1, at
a FOB margin of $75 p/t, the rail spur is paid-back in tax-free income to the tune of $150m in the first year.

Further, magnetic separation is generally a fairly straight forward way of separating the ore so it shouldn't be a huge cost burden (even moreso if the govt plant is drawn-in). Interesting that CFE's Marampa project is also going to apply the exact same WHIMS circuit method.

For comparison sake CFE show 261Mt at 29% indicated and 419Mt at 28% inferred (cut-off grade 15%). My sums for EIO, based on the 187 (of 643) holes announced so far (and an assumed SG of just 2.5), give 501Mt at 41% across the 12.2 sq km drill area (reduced from 14 sq km).

Seeing what Burston and Ariti have done at CFE and AKI gives me solid confidence here in respect to EIO's pathway.