Very easy. Vale has paid $US2.5 B for less resource of a lower...

Very easy. Vale has paid $US2.5 B for less resource of a lower grade before. We have a minimum of 16.6 B tonnes of 29% ore at Iron Bear. 3:1 to concentrate the FE content brings that to 5.54 B tonnes of high concentrate ore. Extract the magnetite from the haematite and we end up with 3.66 B tonnes of high grade magnetite. As we stand here today, that is worth $US0.25 in the ground. Or $US0.94 B. Or $AU1.45 B. Or roughly $1.45 per share.

A MOU has been signed with Vale. If they do not take up the offer, Rio, BHP, Fortescue or Gina will. Vale will take up the offer because they are the leader in high grade DRI pellets and they do need more resource. Vale will spend $AU200M getting to a DTM (decision to mine). CLE does not have to spend anything. The numbers are too compelling not to mine. There is overwhelming demand to produce greener (less CO2) and green (<0.4t CO2 per t steel) steel. Iron Bear can meet that demand and more.

At DTM, maybe $US20B of CAPEX may have to be outlaid. $US10B of that will be third party upgrades (the power, the rail and the port) which will be returned via usage (ie lower rates until repaid). When the bankable feasibility study is completed we will find that that the iron ore price is $US100 per tonne CIF. Our DRI pellets will have $US70 per tonne premium on the IO price. It will cost $US50 per tonne to get the material out of the ground and to port. It will cost $US15 per tonne to pelletize the concentrate. It will cost $US20 per tonne to ship the pellets (we are not shipping to China). Or $US85 per tonne profit. 80% of our material will get this rate. The remainder will be about $US40 per tonne profit. This would equate to $US270B profit less $US20 CAPEX. Or $US250B.

We will own 25% of that profit or $US62.5B or $AU94B. With around 1.4 B SOI (by then with options taken up etc) is about $AU65 per share potentially on the table over a 30 year mine life.

Do you think without stretching your imagination that Vale would think about offering us $US3B to buy us out and give us a 2.5% royalty. This would be $AU3.25 per share. Am I off my rocker? No. Vale has already indicated that should the CAPEX be a stretch for them as well as buying us out, they will pay our portion of CAPEX to be paid out of future profits and we would retain the 25% ownership.

Is $AU2 a share possible, I believe so. I believe based on CLE's DNA the BOD will grab the money and run. The BOD are looking at a big payday which means that a large portion of the money will be distributed. I am looking at $1 fully franked dividend.