analysis of agm

As a summary of the AGM the three most important issues are

1) DFS will be out on/around 13th December

2) Port contracts are about to be signed further news on this is likely before DFS

3) Financing of ($30m) to be done in one hit with CAPEX $23m and working capital S7m, to be hopefully completed by the end of the year

Main thing for me was that an actually definite date was put on the DFS for the first time that of 13th December. Ian stated that this was the date, but then qualified himself with on or around that date. I did however get the impression that it will be completed before Christmas even if it did slip the odd day

He stated that they still expected to begin digging in April/May with the first shipment out 4-8 weeks from digging starting

As soon as digging commences then they are going to start drilling to see if they can confirm the other 600-700mt resource which lies within their ground at Wilcherry Hill

Port options were discussed with the preferred option for the next two/three years being Port Adelaide. Negotiations are nearly at a conclusion and we should expect an ann very shortly. Looking further into the future beyond the initial two/three year period they are looking at other options to load up in bulk. Ian didnt go into detail as this is confidential at the moment, but he was hoping for an outcome in the not too distant future

Financing - Ian was all to aware of the need for financing and, although it didnt indicate what proportion would be debt/equity he did state that IFE would need $30m of with $23m is CAPEX and $7m working capital. The increase is the CAPEX costs are partly reflected in the fact that they are to build a workers village to house up to 75. The cost of which is approx $4m.

He stated that the financing would be done in one hit (how he didnt expand on) but he said that he did not want to keep going back for funding and wanted to get it out of the way. He said that next week he was on a road show in the eastern states.

On profitability, I know there has been a lot on this thread regarding the FOB costs and margins. Ian stated that another company (he did name but I wont) had forward sold their I/O out of South Australia at $135 FOB and that he saw no reason why IFE could not achieve the same.

If that was achieved then the margin would be between $35-$40 per tonne. Hopefully the move to larger vessels in two/three years time will bring the shipping to port costs down by $30 per tonne leaving a profit margin of $60 per tonne (obviously subject to I/O prices remaining at/near current levels which may not happen). The good thing that I took away was that there is plenty of margin now and should prices tighten there is still a viable mine into the future as long as the shipping gets sorted.

Finally marketing. OMS will pay IFE 95 of the cost of the ore when it leaves South Australia. This is good for IFE as it is getting money upfront and is not concerned about finding customers in China.

Overall I was impressed with the AGM. I see no reason why (subject to finance) that IFE should not be a successful miner. The company will get re-rated sometime, whether thats next month or next year I dont know. But if they are shipping 3-4mt per year in 3-4 years time there MC wont be at its current level that I am sure about. With all small miners patience is required and based on todays presentation its only 9 months off money rolling in.

Good luck to all and Im not selling quite yet!!!!!!