re: Ann: Mining Licence Awarded for Mayoko-Mo... Spot on...

re: Ann: Mining Licence Awarded for Mayoko-Mo... Spot on Squidd

Also keep in mind that built into that $230m was a contingency of about $30m. This means assuming things are done on budget it could be as little as $120m.

There is no chance of a rights issue at current levels.

The project is profitable at $100 Iron Ore and the payback period is quick. I think debt funding would be easily achievable as overall this is not a complex project and the capex is very low.

As far as the share price I believe we should be around $1.50. I base this on the fact that if Exxaro's project is worth $350m you can't tell me ours is not worth at least $175m which is $1.50 a share. Add to this the 40c per share cash and Badondo you get to over $2 pretty easily. So $1.50 in my view would still be a discount to the true value.

I am expecting a re-rate this year. I continue to believe Exxaro will acquire this asset. Strategically it is imperative that they consolidate the area and as such have full access to rail and port infrastructure as opposed to sharing it with a junior like EQX. In my view if they bought Mayoko for $200m they will be doing well. I mean we expect to be allocated 2mtpa initially. I expect Free on Board costs to be around $70 for both companies so even at a $100 Iron ore price there is a $30 margin. This equates to $60m per year free cashflow and a very quick payback period for Exxaro. Not to mention the fact that realistically our share of the rail line will eventually be as high as 5mtpa and we have tonnes of Ore which will add many years to Exxaro's project.

The question I have is when Exxaro will make their move. They are still working on finalising all their rail and port agreements. I believe once this has been sorted they may be in a position to negotiate. Now that we have the mining licence Exxaro should know we are the real deal. Furthermore once we get the mining convention we are well and truly on our way to being a producer. It is at this point I believe Exxaro will have to make a decision as I would like to think John Welborn and Co are already working hard at ensuring we have a route to production post mining convention which ensures Exxaro's window of opportunity is closing.

Will be an interesting few months ahead.