G'day Ned,
Sorry I've been out of touch, just sitting back patiently watching everything fall into place.
Good post, I totally agree with your thinking. Those grades are very exciting! As I have suggested it is extremely rare for a high grade haematite deposit to exist as a stand alone, it's almost unheard of. I don't think the market understands that the resource is open to N/E and S/E - this is very positive! I will bet my left knacker that there will be extensions to the resource base here, but there is no hurry to do so. Use the cash to get to name-plate as quickly as possible and allocate free cash to expand the resource base in latter years - there will be plenty of accumulated cash in reserve, even after a 70% payout to shareholders. These guys have done a remarkable job to date!
Some estimates from the model:
Year 3, Production 1.33mt, Fe 62% US150/t, Payout 70%, Cost USD$60/t, AUD 0.76, Export 50% Domestic 50%, Share Price $0.10c, Mkt Cap $205M
1 EBITDA 9m 2 EBIT $184m 3 NPAT $138m 4 FCF $136m 5 Div $95m 6 Div/Share $0.05 7 Yield 50% 8 Accum Cash Post Div $93m
Sit tight, there is lots of fun to be had here!
Cheers
Pihrana
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