Result of the pre-payment received.
Fortescue Metals closed a $1.15 billion deal on Friday with Taiwanese steel firm Formosa Plastics which will see its FMG Iron Bridge project get off the ground.Formosa will join a partnership agreement, created 14 months ago when Fortescue struck a deal with Chinese steel major Baosteel.FMG Iron Bridge was scheduled to float on the Hong Kong Stock Exchange last year, but was put on the back burner when iron ore prices plummeted in late 2012, SMH reports.Under the new deal, Formosa will dish out $123 million to secure 31 per cent of a new partnership with FMG Iron Bridge, and will fund the first $US527 million ($576 million) to construct the stage one of the Pilbara project.The project, located about 100 kilometres south of Port Hedland in WA includes the North Star and Glacier Valley iron ore deposits, estimated to have a combined iron ore resource of 5.2 billion tonnes.Formosa has also agreed to purchase 3 million tonnes of iron ore a year from Fortescue at market prices and if stage two of the FMG Iron Bridge project is approved it will participate.
Before I get struck down by the naysayers and we all know who, I am aware every company and every deal is different....
All I am trying to show here is that....
1. We have the same man at the helm of the discussions who has already been and seen the success of pre-payments from the buyers, and who knows, maybe even started similar discussions with SKI as what FMG did. We all know he is well connected and this is what he has been hired for.
2. They also need our product and need it to start being delivered by 2022 to a major plant in US (IMO).
3. Figures and amounts required are similar also that are required for production of the plant...so asking asking for 100-300m is not an amount that should be disregarded. Many people are saying $3-$10m, but I disagree....this amount would not see any material thing happen, to AUZ or the SP......
If we want the SP in the 30c bracket, and investors to flood in, and a MCAP close to a billion, AUZ need a pre-payment in the hundreds of millions, not a measly 3-10m...
Remember, we are having the likes of experts like Les Guthrie also joining the Board of AUZ, they would not join IMO for a company seeking a measly 3-10m from a fortune 500 company that is locking in a deal with us for $5Billion dollars and maybe more when flemington and thackaringa also get finalised.
Anyway, it is IMO that AUZ should be, and would be seeking a pre-payment for at least 100-300m, since SKI are our sole buyer of the product from SCONI....
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