If you have just stumbled upon HIO and are wondering have you missed the train or am I in too late, I have prepared a summary of the key research I think it is necessary to digest before making your own decision. The stock has performed well this year off a 12 month low of just 7 cents so caution is required as those that have multi bagged become impatient or look for other opportunities potentially sell down. Most of the caution required here has been mitigated through the large volumes of shares traded recently at significantly higher prices. Of note:
over 180 million shares have traded above 60 cents and
some 300 million shares have traded hands above 40 cents and
over 680 million shares have traded hands above 20 cents.
This almost precludes a return to below 40 cents IMO as supply starts to dwindle we most likely wont see 50 cents again (famous last words)
It is my opinion that this is an iron ore producer in the making which has the potential to pay annual dividends beyond the current SP.
There are many parts to form a successful company from explorer to producer and below is a summary of the key ingredients and why I believe in this project
1. People.Hawsons have the services of some of the most talented and appropriately qualified people to bring this project on line:
Mr Bryan Granzien
Executive Chairman,Executive Director
Mr Granzien has more than 30 years' of experience in commercial and corporate experience. His leadership, change management, relevant industry experience and contacts in bringing to achieve strategic business outcomes.
Mr Jon Brereton Parker
Non-Executive Director
Mr Parker has more than 40 years' experience in Industry and he has been working for 26 years with the iron ore producer Rio Tinto, his roles including General Manager, Commercial for the company's iron ore division.
Mr Paul Cholakos
Non-Executive Director
Mr Cholakos has more than 30 years of resources industry experience, managing development projects and operations for oil and gas and mining companies, including through executive roles at Exeter Resources and a variety of operational and commercial roles at MIM Holdings. He has worked in North America, South America and Asia-Pacific.
Their
senior management team is littered with highly qualified individuals who bring a wealth of knowledge to the project.
In addition to an outstanding executive team, senior management team Hawsons Iron have also engaged global specialists to examine optimum infrastructure pathways, process engineering design and decarbonisation opportunities to improve the economics and
Environment, Social and Governance (ESG) outcomes for its Hawsons Iron Project.
Engagements include
• Worley Services Pty Ltd (Worley) with Mineral Technologies Pty Ltd, has been engaged to
manage the Hawsons Iron Project’s process engineering studies.
• Worley’s Advisian business has been engaged to determine an ideal Energy Balance that
optimises ESG and sustainability outcomes.
• As part of the extended Bankable Feasibility Study (BFS) studies to incorporate a 20 million
tonne per annum (Mtpa) production option:
- slurry pipeline specialists Fortin Pipelines will examine an underground, direct-to-port
slurry pipeline; and
- global port infrastructure experts Royal HaskoningDHV will examine port options.
• SLR Consulting to lead the environmental approvals across New South Wales and South
Australia.
Worley has signed a feasibility services agreement with HIO to undertake, together with its
subcontractor Mineral Technologies, the metallurgical and process engineering for the process plant
test work program and mine engineering design to deliver the most cost-effective solution for the
Hawsons Iron Project.
Worley’s Advisian consulting business has also been engaged to identify and analyse an ideal energy
balance and decarbonisation opportunities to improve environment, social and governance (ESG)
outcomes and broader sustainability opportunities for the project.
2. The project.Quite simply to understand the enormity, scale, and potential profitability of the project I feel there is no better reading than the independent
research reportQuite simply it has been identified by independent analysts as the
world’s leading undeveloped high quality iron ore concentrate and pellet feed project.
The resource is a twenty year resource with expected upgrades to resource (Due this QTR) and results from the BFS (Due in December) expected to pave the way for both an increase in LOM (20 years) and and Annual Rate of Production (20Million TPA)
Upon completion, the Hawson's Iron Project will lay claim to, "
the highest grade Iron Ore Project in the WORLD"
Independent market analysts CRU have made an assessment of the Hawsons project, concluding that:
Business costs are in the first quartile of the global iron ore supply cost curve
Business costs show Hawsons to be the leading concentrate/pellet feed project globally
Hawsons offtake customers cover the Asian steel making market and the Middle East direct reduction market:
3. Finance & Approvals
HIO are in great shape - Last year the company raised $200 million through a put option agreement with US investment group LDA Capital Ltd. This will see them trough to the completion of the BFS without dilution. I'm not saying that there will be no Capital raising but it can now be done in a timely manner with minimal dilution, something the Bryan has always acknowledged as an important strategy to ensure that dilution is minimised.
(side note - it would be expected that Hawsons iron will receive a further $50 million through the conversion of the LDA options)The project has received
MAJOR PROJECT STATUS“The decision to grant Major Project Status is based on the opportunity your Project offers through supply of its high-quality magnetite product being a preferred input to the making of low emissions steel. In addition to export opportunities and emissions reduction, the project will provide significant benefits to the Broken Hill and the South Australian port regions through job creation and skill retention.”Bryan Grazien stated the following“Significantly, this decision will help us more efficiently clear the path of regulatory approvals
required to develop and bring the Hawsons Iron Project into production in 2024,”You will see plenty of positive spin on these threads and in the interest of trying to provide a balanced investment case I have added an exert from the independent research report highlighting the weaknesses of the project:
Weaknesses
High capital cost: Magnetite concentrate operations have a high up front capital cost, when compared to direct shipping operations which can make funding more difficult and complicated. However, given a number of factors, including location and existing infrastructure, Hawson’s is expected to be relatively low when compared to other such operations.
Market capitalisation: We would need to see the Company’s market capitalisation increase significantly to allow it to raise the equity to fund the proposed development without excessive dilution of current shareholders. We would expect future positive news flow (including with regards to other financing and offtake agreements amongst others) to increase value.
Share Price at report release date was 19.5 cents
The ESG credentials of this project should provide access to additional sources of financing (including Green Financing), as well as Government support, both financial and in permitting in addition to making the Project more attractive to traditional sources of finance.
As you can see from the table above one of the greatest risks of dilution, has at this stage, been largely negated due to the progressive increase in SP. Should th SP progress past the $1 - $1.50 range post resource upgrade and BFS, then there will be minimal dilution at an acceptable level.
Good luck with your investment decisions - Mine has been a long term one with day to day fluctuations irrelevant. There are only three announcements between Explorer and producer IMO
1. The impending resource upgrade - anything over 500 million tons is an absolute bonus (expected before June 30th)
2. The delivery of the BFS - does the BFS present a 20MTPA / 20 Year LOM case - anything over is an absolute bonus (expected before Dec31st
3. The Procurement of the finance - Preferred ratio of 65 / 35 Debt to equity with SP at time of share issue above $1.50 anything above $1.50 is an absolute bonus (expected shortly after release of BFS)
GLTAH
Cheers Rb
(20min delay)