Macquarie Struggled with Flinders Mines AFR, page-20

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04/02/15

16:16

Post #: 14697772
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Originally posted by jake0002 ↑

with FMS, RTA, Todd and a Chinese steel mill grouping together, we probably have all the parties needed to make it work.
obviously the price iron ore is the kicker - in fact it is not the current price I/o, it is the price from about 2017 onwards.
everyone must take a view on where the PIO will go.
the Chinese will be desperate to secure supply from sources other than the big boys.
the Chinese govt is encouraging Chinese entities both Govt owned, and private, to secure equity in overseas commodity ventures. Good example is Chinese private purchase of WCL.

I could imagine situation where Chinese mill executes a binding Purchase Contract for supply of I/o for say 10-15yrs at xyz pricing. Chinese steel mill would have a strong credit rating.
once this is executed, FMS can look for funding.
funding could be Project Funding
it could be a pre-payment from Chinese steel mill.
it could be part funded by sell down in PIOP ( we have 100% which gives plenty of scope to sell down say 40%)
it could be part funded by sale equity in FMS.

once this funding is sorted, it would allow Todd/RTA to fund their port and railway.

essentially the funding of PIOP and BBI needs to be completed together, because PIOP is stranded without BBI, and BBI is unviable without FMS as foundation customer.

PIOP is simply dependent on PIO and cost of production (and that is where the issue of alumina and silica would be addressed)

all imho
cheers

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Most points covered including China wanting independence from the big 3-4 but if the price of iron ore remains modest why wouldn't Chinese mills consider supplying finished steel products to the World's new growth engine-India? IMO.

Otherwise it could take Indian steel producers such as NMDC years to crank up production to levels required by Indian PM Modi? IMO.

FMS Price at posting: 1.5¢ Sentiment: None Disclosure: Held
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