independent expert opinion out, page-59

A little surprised that no one seems to have read the IE report much further than the conclusion on the range. I'm sure Westcott will (meant as a compliment)

EY earnt their 200K for this one

- range was a little higher than I has cynically expected
- discount rate of around 13% real looks about right for country risk for project. But far too high for the corporate overhead given Perth management are certain to be paid (overstates value)
- Given the nature of the report no mention of any synergies available to Hanlong (understates value to Hanlong)
- long term real iron ore prices of 130c/dmtu are aligned with consensus
- they used 2011 cost data from the DPS. Almost two years old. No mention of whether these costs were updated to current levels
- page 44 says freight cost is between $15.55/t and $15.34/t then the model uses 15.5 c/dmtu. Wrong units (overstates value)
- page 50 there is significant downside (but no upside) to project timing. A two year delay reduces project value by 40%.

The last is the true kicker which overstates value with the "base" no delay assumption. Any delays in standalone SDL financing and/or approvals destroy huge value.