Year in review: Disappointing, but steady.This year we had two...

Year in review: Disappointing, but steady.

This year we had two approvals pending, the change to the trans-shipment distance and the use of a buffered storage space to reduce total containers required for capital purchase. The second one being the Lucky Bay port approval amendments, and chewed up practically the whole year.

I was hoping the approval would provide some positive SP gains, but not so. Triggers therefore are around financial approval and actual first shipment (which is where the biggest re-rating will occur).

So without dwelling on the past, what does the future (2014) hold?

Financing is required before much can happen, it is believed that was held back due since nothing could be granted without port approval. I would rather have hoped that there would have been some conditional finance approved, subject to port approval, or something waiting in the wings once port approval was given. The time for that to appear is gone, and we are now staring at the Christmas break, cant see anything happening until mid Jan. Cant see that financing won't come, so its timing.

Construction once financing is approved is around 5-6 months. So could we get first shipment occurring sometime in July?

So assuming that something gets off the ground later in the year, what can happen to the SP? Lets try some numbers, rather than sentiment:

Current Shares on Issue: 107,903,871
Current SP: 17c
Market Cap: ~= A$18M

So what scenarios do we have? Over first three years of Stage One we have a probable range of $48-$90M.

Discounting those by 20% for TRF free carry, we can be looking at $38-$76M. Assuming that the companies total value is only equal to that, then we have an SP of 35c-70c.

Downside possibilities from there - complete crash of IO pricing, and rise in AUD - both seem unlikely to me.

Upside - I would say is based on project work rather than pricing. So upside comes in from later stages, with more resources, better scale - but requires further captial. We dont know costings. There is also the manganese, which should add value. I could see it realistically going to $1 plus.

So give it 6 months, and lets see some SP upside .... why not? Cant possibly have gotten this far to fail now....

TRF is another kettle of fish, and I will comment there when more information becomes available (tin drilling, OGX results, twin peaks data etc), but its success depends on IFE. It needs the IFE cash flow to start coming soon ....