china can access rail. simple: stump up the $$, page-5

I think you are misguided by illusions.

You must take a realistic view on how the iron ore suppliers market operate:

1. The iron ore price boom is now over, but that does not mean China has stopped buying iron ore. Its just iron ore prices are now at more realistic prices as forecast by FMG. I agree with FMG's outlook on iron ore. Prior to this, iron ore was at a bubble market where junior explorers will even fly eg. DMA, FMS, WFE.

2. We are now looking at today's iron ore market and those of the near term. Realistically China does not need to secure supplies as urgently as before as iron ore prices are floating around $100-140/tonne for fines. You can see, why SDL was a failed takeover and I doubt, any Chinese company is likely to takeover SDL in the near term. This is because the CAPEX for Stage 1 & 2 will amount to in excess of $6b to develop. Oakajee Port & Rail (OPR) is also an excellent example how a requirement of $10b where the Japanese will fail in attracting Chinese investment. AQA is also another example. China can simply buy direct ore from FMG, RIO, BHP, AGO, BCI, GBG and others.

3. Just months ago, iron ore prices crashed, you look at FMG, AGO, RIO, and BHP took a hammering, but stocks like BCI and BCK held up well (slightly down as opposed to rapid falls with AGO).

4. Now in today's market, rail access is critical for any iron ore developer to go ahead. This is the same with any case whether its BCK, FMS, Roy Hill Iron, or AGO. But in FMG's case, there is no incentive for them to let other players use their rail, this will only flood the iron ore market with more supplies thus more suppliers will mean lower prices. But however FMG will let other players use their railway, ONLY if they are willing to pay the price.

5. So in AGO's case, they want to get access to rail in the quickest possible timeframe with the less amount of time needed. Eg. Supporting QR National to develop an independent rail network in the Pilbara will cost a big investment and require time for it to develop. Whereas using the FMG option, that ore from the Southeast Pilbara will be ready to ship when the mines come online, but just one condition you have to pay the FMG price, which in my opinion, FMG is asking for a big price tag. But think about it in BCK's case, they don't have real connections with Chinese SOE's such as those of Sinosteel, Ansteel, etc. The QR National option is the likely case, but at the same time the FMG option is needed, if FMG plays hard ball, then other options will be needed to put FMG on the spotlight.

6. In my opinion, juniors like FMS, DMA, WFE, will find it hard to sell their iron ore story. BCK may have at least a better chance. But even for AGO, it will be difficult as well. It will be critical for AGO to secure a rail deal, for them to convince the market that AGO is truly an emerging big iron ore producer ie. to hit the 48mtpa production target.

So with all these current scenarios, there is no need for China to even fund any rail infrastructure, where these miners can't do it themselves. That's why AQA can't even secure any funding.

Disclaimer: I only hold AGO as an iron ore stock.