M4M, page-120

RE: M4M - China

Hi

Thanks for reaching out.

What I have learnt about China is that it is the master of propaganda when it wants to manipulate commodity pricing. Right now China is predatory pricing steel exports in order to capture market share from India which is an aspiring steel producer in its own right.

The stories of iron ore collapsing are not new; they have been around for as long as I have been in the industry and well before that as well. Iron ore, like other commodities, is cyclical; it will rise and it will fall off the back of demand and market manipulation which is what we are seeing currently.

Once we have a defined project along with actual specifications of the iron ore products we can offer I will be looking at all markets including China. The key to building a sustainable iron ore business is getting iron ore on a boat for the lowest cost possible and this is a factor of cost controls on site as well as proximity to port. More often than not, the single biggest cost is the cost of transport from the mine gate to the port. Strategically, all of our projects are within 250-300kms of a port location and, with Cane Bore, Catho Well and Goldsworthy, well inside 150kms which means we are well placed to be a lower cost producer than other producers who do not use rail to get their products from mine to port (such as Atlas, Fenix, CuFe, MRL etc).

At this stage, we are continuing on our stated plan of project definition, evaluation and prioritisation, with a focus on ensuring lowest product costs possible so that we will still be profitable at times when the iron ore price is depressed.

I trust that assists.

Simon

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Above is the response I got from SR when I questioned him about the media 'doom and gloom' regarding China and iron ore prices.... Very compelling response!!