Hi guys,So we talked for over an hour about all sorts of bits n...

Hi guys,

So we talked for over an hour about all sorts of bits n pieces, most of which was commentary and discussion topics rather than hard and fast facts. All of which is in the public domain in some shape or form. Here are the main issues covered:

1. Progress of tug and barge ? All is on schedule, and the barge is close to being acquired. As I understand it, there is little else to do as far as organisation is concerned with regard to the ?loading? infrastructure. No cost blowouts, no delays - all is good.

2. Road development ? We didn?t discuss this today, but did last time we talked, so I?ll throw it in anyway ? it looks like there might be a few km?s of roads to be constructed around one of the towns as you head towards lucky bay. This will be covered off by parts of the rail head and like costs that were quoted in the DFS, i.e. nothing really changes $$ wise.

3. Production schedules ? nothing to report other than there is no alteration to previous expectations (i.e. Dec 11 or Jan 12)

4. Meeting ? there should be a presentation made at the AGM. Expectation is for some ?explanatory? information to be given re AGM resolutions.

5. Righto, the ones you?ve been waiting for :) - Resolution 1 ? I asked whether ratifying the previous placement is designed to allow IFE to have the option to issuing another 15% within 12mths. No, that is not the intention. The resolution is not intended to be another bite at the placement cherry, just to clear the deck. It is apparently absolutely not the intention of IFE management to issue more placement stock via this resolution. I?m taking his word for it, rightly or wrongly. Am i stupid? Maybe, but IMO, I would refer all to three major factors. 1. How many insto/soph placements have IFE done since listing? one. 2. How many times have holders had equal or better capital raising terms put before them? Everytime. 3. How many shares are on issue compared to practically all peers at this stage of the game ? and how many have had multiple raising to get them to this point? IMO, capital has been tightly issued, and equality has been a centrepiece for all raisings thus far. I honestly believe this is the continued intention of IFE management.

6. Resolution 3 ? this is an interesting one? as a background, it was explained to me that when any cap raising is announced there needs to be a description of what it is for. Yep, that makes sense! Ok, so why stage 2 PFS? Why not stage 1 W.C, i.e as a backup (plan B) should debt finance become an impossibility? Well, I get the feeling they may have made a boo boo quoting stage 2 PFS, as this is not really their main intention for the funding. It has been long known that IFE is trying to cover all bases. Having a plan B for financing the remaining CAPEX/WC is a good thing. I mean, who knows if we have another market crash, etc that disrupts the debt market. I for one am totally for having contingency plans in place. That is good management. So, IMO, and I told Ian this, IFE is shooting itself in the foot by making statements about the use of this capital, and by not including a mention of Plan A in the resolution explanations has caused much angst, anger and confusion amongst many holders. I referred to the share price as a gauge of market support and opinion of the information submitted to it ? clearly the market did not like the resolutions. This is avoidable by simply stating more in depth and accurate information, i.e. what do we do as shareholders? We can only act on information you release, and not on intuition. My take from this is that IFE are trying only to create a Plan B that is easily activated if and when necessary. I honestly do not believe we need to worry about this resolution being enacted ? debt finance is forthcoming, it is just a matter of waiting for the MLA to become IFE?s collateral to offer the banks.

7. Employee Share Scheme ? I must say that on a generic level I am in favour of EIS?s. It is industry standard to provide ?additional? benefits for employees to meet targets. What I took issue with Ian about is the timeframes. Using all information available to us on the market, we can see two things. 1. Consistent expectation that first shipment takes place Dec 11, maybe Jan 12. And 2. Rewarding an April first shipment date is grossly unfair to current holders. I put to Ian ? As a holder of also 4yrs in duration, why should I give up significant proportions of my investment to some bloke you employed mid 2011 (with the express goal of getting first shipments out by end 2011 calendar year), for achieving a goal 4mths late?! That is not fair IMO. The discussion was long and interrupted by my phone dying (damn Nokia!) so we didn?t really come to a conclusion on why they should get reward for missing their target by so far, but! it was covered, with mutual agreement, that specialised employees these days have many employment options available to them. IFE have acquired a quality team. This is not cheap, and not easy to do. Essentially, rewards are part of their expectation, not a potential bonus as such. Whatever!! I think I need to change industries :)

8. Director?s options ? boy, how do you talk about this?! Look, I towed the same line as the EIS - no issue re having incentives in place ? but?. only for hitting targets, hurdles, etc. Not warranted from my/the market?s prospective for missing general market expectations by up to 4mths.

9. Ian is more than aware that the market is unhappy, and that there has been many negative comments made via HC and other means ? emails particularly. I didn?t question whether he has responded or not, as this is not my business, but, given the discussion on HC, I doubt he?s got back to many. This is not a good thing IMO.
So, to summarise my position on all this. I think IFE have stuffed up the resolutions. Firstly the raisings are incorrectly worded, and not a completely true reflection of management?s intentions. Secondly, With the EIS we really do need to accept that employees these days are able to construct very good deals for their services (IMO too much) but it is a frustration that can be held by any shareholder of any mining stock. Looking at the big picture, as much as I?ll hate the potentially slow stripping of my equitable interest in our company, I do think that we have a team that can get us into a cashflow positive position very soon and as such our reward for perseverance will be rewarded in multiples. Im going to stick to the longterm perspective and consider these issues collateral damage. IFE is on the verge of doing something very special, and I want to continue being part of this story. I just hope that the storytellers make sure they improve on their ability to appease market participants and put extra effort towards fully explaining issues and intentions!!

cheers
Split