In principle, I agree with the two previous posts on this Roy...

In principle, I agree with the two previous posts on this Roy Hill LOI. Sizing the longer term benefits is another matter, but suffice to say it could be significant.

Odly, it is NWH's failure to progress its diverse-away-from-Pilbara-iron-ore strategy that is going to save its bacon in the short term. If one looks at its recorded strategy in places like Westpac Online broking, one reads:

“In order to diversify away from its traditional WA iron ore exposure, NRW Holdings is looking to expand geographically both in Australia and offshore. It has a small presence in Africa. The company is also expanding into east coast coal and seeking opportunities in oil and gas infrastructure projects. Success in winning a coal contract at Middlemount in Queensland is a step in this expansion plan. . .”

If NWH obtained more of its revenue from abroad, the eastern states and from coal, its immediate term future would be less rosy. As for the long run – right now all that interests me is FY2014 and FY2015, or to quote (probably inappropriately) from J M Keynes, “But this long run is a misleading guide to current affairs. In the long run we are all dead.”

If NWH surprises on the upside in FY2014 and FY2015, as I expect it will, the mood-swinging Mr Market will wax ebullient and bid up the SP, and I'll skip out. Or that is the plan. Like J M Keynes, who was famous for changing his mind, if the facts change, I'll change my plan.