Ann: Trading Halt , page-20

In the context of a very unusual step of going into trading Halt for an expected resource upgrade.

I would not be surprised if a Joint Venture/Off take agreement is announced.

The Following is worth rereading.

TONY Schoer has been clocking up the air miles over the past few months. The company he heads, Pluton Resources, has 14 confidential agreements in place with parties interested in its iron ore all but one being Asian with location, location, location, a key selling point.
Not only is Plutons Irvine Island project in the Kimberley the closest iron ore project in Australia to China, its location as an island with 54m-deep water right next door means the need for significant infrastructure such as rail and port is bypassed. As is the case, for example, at Cockatoo Island, located 6km away across the water from Irvine and mined by Cliffs/Leightons.

Pluton is looking at a number of different deposits on Irvine, with Hardstaff Point containing 54Mt at 49% iron and the Isthmus Region about 3.5Mt at 60-62% iron. At the latter Pluton is aiming to delineate 15-30Mt of direct ship ore, while at Hardstaff the aim is to reach 100Mt at 49% - with an update in a couple of weeks understood to be likely to lift resources to about 75Mt. Both of these resources are within the Yampi Member rock unit.

In addition, Pluton sees the potential for 200Mt grading 25-30% iron within the Wonganin Sandstone rock unit, previously seen as overburden but which testwork has shown can be simply processed to yield a marketable iron concentrate grading in excess of 66% iron.

An interim resource on the way to the ultimately seen possible 200Mt is also expected within the next 2-3 weeks.

Schoer is hopeful the resource increases will awaken the market to the project offtake parties are already showing serious interest in.

Critically, with $A12 million in the bank, Pluton has the cash needed to continue work.

By Schoers reckoning, Pluton will need about $A25 million toward the end of the year for the feasibility work. The aim is to access funds from one of the parties now looking closely at the project.

If we can get those funds off an end user ... that will give them a seat at the table to then enter into offtake agreements where they provide financing and we provide the tonnage, and whether they then get some equity in the project or whether we give them a discount compared to the benchmark, thats really up to the end user and the way they want to go, Schoer told HighGrade.

In terms of milestones, two or three resource upgrades are likely between now and the end of the year, with the pre-feasibility work likely to take about 12 months. A completed feasibility and all approvals are anticipated by the end of next year at which time construction will begin.

Capital costs are put in the order of$A350 million, while operating costs for a tonne of product on ship is estimated at $A37/t for product which today is fetching about $US150/t. Schoer said the company was aiming to produce 5-7.5 million tonnes per annum.

Clearly, with a market capitalisation of less than $A60 million this week, Pluton is currently being overlooked by a market with other concerns on its mind.

Schoer said an east coast roadshow would be undertaken next month, with an investor trip to Irvine planned around July.