Ann: General Security Agreement, page-842

Not sure if you lads are into your iron ore stocks, or following the iron ore market in general, but I can recommend FEX (Fenix Resources) in that space. Current Market Cap around $160m AUD. I own both TSO and FEX as my only two mining shares.

It's a classic case of them being in the right place at the right time really. Their current deposit has a mine life of only around 6 years (@ 1.25mtpa), but they have started mining and shipping ore out of Geraldton since early this year, and have already reached steady-state output at the mine. They are cashflow positive when the iron ore price is around $80 AUD/t. Compare that with the current iron ore price of around $250/t AUD (62% fe grade) and around $300/t AUD (65% fe grade ). They have a mix of 62% up to above 65% fe grade in their deposit. So they are currently benefiting enormously from elevated market prices.

No one expects the current iron ore price to be sustainable for a long period, but even if the price remains elevated for another 12 months (even at a discount to current market prices, say, at AUD $180/t), then FEX will still generate $125m AUD in free cash flow over the next year (compared to their current $160m market cap). And they still have another 5 years of mine life. That lower AUD $180/t iron ore estimate over the next 12 months is a pretty conservative assumption in my eyes, considering ongoing supply issues in Brazil and India, and increasing Chinese steel output and hence demand for steady, reliable and premium ore (which mainly comes from Aus). You can imagine their current cash flow per quarter at existing iron ore prices of $250-$300/t (whether or not this is short lived, who knows).

FEX have already started drilling other areas surrounding their existing mine, and are now scoping ways to use their cash to expand, so everything is pretty much looking rosy for them over the medium term.

The only small risk they have is if there is a (very) severe deterioration in the Aus/China relationship. But even then, that shouldn't materially affect China's demand for iron ore from Australia, as both Aus and China are pretty much tied to each other (fr better or worse) in a strong supply-demand relationship for at least another two decades until China slowly diversifies to other countries (mainly Africa where they have some interests).