Ann: Iron Ore Scoping Study Update, page-4

A couple of other thoughts.

1. The more work done on the GIB project the more the risk is reduced and the more valuable the project becomes. eg. it's more valuable now with drill results from GIB than it was as just Maldorky and Grants. Add JORC for 3.5bill tonnes in GIB and it value goes up again. Add a PFS, value goes up again.
. -Therefore, if after the scoping study, SIMEC are confident that the project is going to be a winner they may want to buy the whole project before it is value added through a PFS. Buy it for X dollars now from HAV to save having to pay more for it after a PFS.
. -If SIMEC was to fund the project PFS then they are increasing the certainty/value of the project and therefore increasing what they will have to pay to buy it. A PFS with a NPV attached to it is going to make GIB much more expensive to buy.
-This makes me think they would want to buy it outright asap (assuming they are confident). Get it for as little as possible.

OR

2. What about a farm in arrangement:
$10mill cash buy in for 10% stake in project upfront.
For another 20% stake SIMEC complete infill drilling and PFS
For another 20% SIMEC complete a DFS
For another 30% SIMEC funds and completes all permitting, the CAPEX expenditure, .

At each milestone the projects value goes up and SIMEC's percentage of ownership also goes up.
You would want a 'finished in X months' clause for each stage. If they fail, SIMEC looses a portion of their earn in for each month it is late eg. 1% loss of buy in for each month PFS/DFS is overdue.

It finishes with a fully working mine, SIMEC own 80% HAV gets 20% of a working mine and it doesn't cost them a cent.
You could play with different percentages of course.

Doing it this way means SIMEC has little upfront expenditure in terms of buy out.
As they complete activities they earn a greater %
HAV has no ongoing costs.
HAV gets an upfront payment that would help with cashflow for a couple of years.
As the project is developed HAV's percentage of ownership goes down but that would be offset by the increased value of the project.
20% of a 10mtpa Iron Ore mine would be a lot of $$$$

Just a few thoughts. What you you think?
Justhavinago