Ann: FEX: Fenix Bidder's Statement, page-40

This is a good deal, am happy to trade my 1.5% holding for 0.98 FEX shares. FEX has good upside potential from here with addition of CZR for a bargain price IMO. They commenced production at their Shine IO operation has increased their tonnage by 60% while initial costs are high due to development, I expect (with chart in mind) that there is more probability of SP appreciation if converted to FEX than remaining in CZR. Especially now that the Miracle Iron deal has fallen through. Dilution has seen FEX sold off initially, at least while the market scrutinises the value addition, which I don't doubt they will exceptional value in it soon enough. FEX strong earnings do not seem to be maintainable with their strong spending on development, which is eating into the margins. Yes, the tonnage is up but profits are down substantially. There is little explanation for this, but I can only attribute it to their aggressive development and since their production costs include "Costs of production includes ore and waste mining costs, processing costs, site administration, haulage, storage and support costs.."

If they maintain a stable cost of production of ~$85/t (currently $81) and IO price remains above $150, with their expected 3 mines to reach 4mtpa by end of 2025, that equates to $260M EBIT (PE of 4). Make it $130M for unforeseen circumstances and that will equate to a PE of 8 or so after tax if you add all of CZRs shares of 235M to FEX share total of 740M. Allowing FEX to self-fund development of Robe to production, much like they did with their Shine mine.

Their port terminal is complete (possibility of tolling third party ore?), but they only have about 7 years of mine life left on their current operational mines. A few of those years worth of profit will go straight to Robe development. The plan seems viable, value is there, and they seem to have a record of good development outcomes for shareholders. FEX chart seems to be hitting HH and HL over the last 6 months, for what that's worth anyway!

FEX seem to have to momentum to drive forward and their balance sheet is strong. Also, speculative tendencies on the value accretive properties of Croydon and Robe may stir the FEX price upward past rational levels, especially at the modest price that they are trading at now. Overall, having CZR price movement welded to FEX is a risk reducing play by Mark and likely an overall positive outcome for shareholders. Although where SH are going may be just marginally better than where they are. It is an overall improvement from where they were likely to end up if this deal had not been made.