Regardless of the numbers, I don't think we will be seeing an offer of 1:1 FMG scrip any time soon.
Twiggy Forrest hates dilution. Hates it. There is simply no way he is going to go throwing around FMG stock unless he is getting something for nothing and with our share price at $1.20 ish I'd say that offering to swap us 1:1 for $5 FMG stock would be one of the most generous offers I've seen in my lifetime.
I reckon IOH might go for a farm-in deal with FMG, with minimal up-front costs to FMG but a royalty around $2-$3 p/t once they start mining. As part of a binding deal IOH would need to lock in a start-date and minimum volumes for mining and FMG pay a non-performance penalty if they don't start on time or meet the agreed volumes.
To me this scenario offers a win/win provided FMG are planning to move 10-15Mt p/a it removes any up-front financial hurdles and if FMG can fast-tack mining IOH could be looking at significant LT cash flows within two yrs or so.
Just my 2c worth.
IOH Price at posting:
$1.21 Sentiment: Hold Disclosure: Held
