I'm certain Alwyn is working on just that as the plan B. Very difficult until FMG actually seal the deal in farming out a share of their infrastructure but I'm sure AV has the inside running. It's a much higher risk option for IOH but also much higher reward if the price of Fe stays high even at small volumes and I imagine Iron Valley would be a fairly low cost operation as it's outcropping initially and dry.
If $40 FOB is possible out of Buckland you would have to imagine something in the same ball park is possible out of Iron Valley.
FMG would have a small problem though, if we start up a mine at Iron Valley how will they ever get at Nyidinghu? Way too much overburden on their side of the deposit to mine it from that side the strip ratio would kill their profit margin.
Our mine life would be at least ten years - are they willing to basically write off Nyidinghu for 10+ years?
I still think while the iron price is strong FMG must want Iron Valley, they are probably trying to renegotiate a few things within the deal as Doc suggests the take or pay conditions are probably being tinkered to allow FMG to shelve the project without penalty if Fe prices fall below a certain level.
IOH Price at posting:
77.5¢ Sentiment: Hold Disclosure: Held
