Ann: Acquisition of Mid-West Iron Ore and Port Assets, page-9

I had a meeting at 12 so didn't get on to the webinar, but hopefully they will upload it later, but for me, this answers very few of the questions that we bhad over the longevity of this business.

The biggest risk out their is the IO price and the life of mine. They need new tenements that can generate value. I'm not sure Shine, having been moved onto C&M because of the low IO price, and wasn't reopened when the IO price went up and now with a materially lower IO price will it add any value.

The $5 C1 cost saving (if real, I know I was fairly vocal about this on the NH acquisition that this increase didn't represent an EPS growth rate) is nice, however SH's want to know what impact this will have on them.
So from a dividend perspective, current dividend is around 10.5c annually, based on 584.2m shares (before the extra 20m shares for Craig Mitchell) is a dividend of about $61.3m. Obviously holders will want to know that their dividend isn't impacting negatively by this, so assuming the 10.5c dividend holds (prior to the Craig Mitchell shares), then with a revised SOI of 644.2m, then the dividend would be $67.6m, around $6.3m additional cash needed for the dividend. The $5 C1 cost saving per tonne for 1.3mt is $6.5m, assuming they maintain a 60-80% payout rate (and allowing for additional tax on that $5 cash cost saving) would lead to an additional $2.7m-$3.6m, which is far below the required increase to maintain the dividend.

I thought it was yet again very clear from JW's comment that EPS and DPS seems to mean less to him, but are the key measures for holders. This one appears to be EPS and DPS dilutive (similar to the NH acquisition), unless they can make a lot back from Shine, which I'm not sure is possible. It will be interesting if they quote an expected C1 cash cost of operating Shine, as if they use that to blend, it will dilute the earnings for Iron Ridge, as it will lower the premium they get by diluting the current high yield IO they are selling.

I'm also unsure whether their focus on increasing production from Iron Ridge is the right strategy, bearing in mind they have nothing coming through in terms of mine replacement once they exhaust all IO at Iron Ridge. The current mine at 1.3mt has a life of around 6 years, if they increase that to 2mt, then that reduces mine life to 4 years, but without any replacement assets in development.

I was probably expecting a different sort of acquisition to this. Of the initial announcement it sound at best like an acquisition that doesn't really do a lot for the business as a whole and in particular SH value, but I'll be looking forward to see if there is any more information released in the webinar and hopefully an acquisition presentation.