BCK JV with MIN, page-62

I wonder what the CFR China cost would be with an MRL/FMS solution? I notice that FMG today gave fy18/19 guidance of C1 cost between $12-$13/t. I think that would mean a CFR China cost of around US$20/t? Now, we’ve all seen the BBI presentation to the KCC back in June that appeared to show their CFR China cost for our iron ore around US$30/t. We have seen that BBI will need around $5.6b capex (that will need to be repaid with interest). That includes a new port and rail that FMS, it appears, will have no stake in or any ongoing ownership. Should a MRL/FMS solution be viable I believe the capex would be substantially less than that of BBI. Also, FMS and their shareholders could end up with part ownership of the rail. The port already exists.

The big question at the moment for FMS shareholders is just how would a BBI proposal compare to a MRL proposal to provide a supply chain solution for our PIOP IO? How can BBI offer a superior solution given their expected high Capex and Capex repayment? Will FMS prepare a comparison for shareholders?

Alternatively will BBI be offering FMS substantial incentives to offset a possible better deal from MRL?