There is no doubt SHIP deposit is a good one. With 20M Mt of...

There is no doubt SHIP deposit is a good one. With 20M Mt of marketable Iron ore at 58% FE. Currently Spot market is approx $100/MT USD or $110 AUD. Lets assume selling price $100 AUD. The Yilgarn average for cost CIF China is approx $70/MT. Therefore before cost of funding, Taxation and Amortisation, there is a margin of $30/MT. $600M. NPV.

However, in managements announcements they are claiming $325M as capital Expenditure. Therefore before any Iron ore could be sold, $325M AUD would have to be spent. If we assume that the above funding deal is legitimate and real- my purpose here is not to question the credibility of management and its directors and consultants, but to valuate the proposal, then FAS would make $15/MT EBITDA. Therefore with production at 3M MT PA is $45M EBITDA. If we assume FAS will not pay tax for a long time due to its large tax losses and it trades on 5x earnings then it may trade around $250M. With 1.4B shares on issue and probably 2B by the time it gets into production, then it may trade at 12 cents.

However it has debts of $10M which apparently are being paid off by the JV partner. Additionally it may incur further debts by the time it gets into production.

This is best case scenario.

Now all this makes sense if they can raise $65M for 20%. Management has mentioned that it has 4 offtake partners who will pay $65M to secure the offtake. That is all great, however FAS are missing one vital point- no port access. The MUIOF will not give allocations for at least 6 - 12 months.

I therefore question without port access guaranteed unconditionally, why a Steel Mill or Trading House would advance FAS $65M.

Therefore until unconditional port access is granted - I severely doubt that an offtaker will give FAS $65M+ and thus FAS may continue to struggle waiting for the funding.

I hope I am wrong.

There are lots of winners for FAS, shareholders, management, consultants, Yilgarn Region, State Govt, workers and compeitors - but in these times just a tall order until port access is secured.