Ed, I have no idea how you justify X tonned of iron ore at 18% =...

Ed, I have no idea how you justify X tonned of iron ore at 18% = Y cents per share of value. Your maths are, frankly, absent.

Earnings in this case will be governed by an equation which looks something like this:

Earnings = (concentrate sales - cost of concentrate production - interest - tax - sustaining capital)/ ADY share of project.

Right now the only vague figure we have is that gross profit margins will be 40% of US$75/t or ~$30/t. Gross would mean before tax and other non-production expenses like interest.

Lets assume they get a $240M debt facility. $24M per annum interest at the current onerous commercial rates. This implies they will need to produce in excess of 1Mtpa just to cover interest - clearly they need to get their efficiencies up significantly via the application of that capital. Lets hope their crushers turn up on time and work properly this time.

So, by 2011 they'll produce (they say) 10Mtpa concentrate grading 69% Fe, earning them $300M gross profit. $210 after tax. $186M after interest, $166M after repayments, minus sustaining capital, etc. Divide it by the project equity they have left after Shougang takes its bite, and then further divide it by the number of shares on issue (on a current basis; no doubt there'll be a consolidation) and, well, the best you'll get will be 16c EPS, but more than likely it'll be 8c EPS after equity split and dilution from capital raisings.

IF Shougang takes 50% and they dilute 20% for equity, you'll be sub 6c EPS.

PER8 is possibly 64c at best. If you believe they can consistently produce 10Mtpa (unlikely on current performance) and they deliver the project on time (rare for even well managed companies) and on budget (likely impossible).

The greatest risks aren't the ore, its management. Already we've seen two episodes of share sales to expunge debts of a paltry $10M or less. What kind of damage will a poorly managed operation loaded up with $240M debt do to the equity position of shareholders? This is your risk.