yes, but comparing non resource China approvals to Iron ore (Au largest export) is like comparing apples and asparagus, there still is not any other deal similar to this one in terms of political sensitivity. Miracle has been around for a while, and I expect the delay is due to their rapid purchase of Paulsens east and then Robe Mesa deal a few weeks later. FIRB is particularly sensitive about their resource sector. If they reject this outright it will not bode well for politicians who have obligations to their wealthy supporters, many of which likely rely on foreign investment to some extent, especially in propping up residential and commercial land/real estate values, of which I might add FIRB is quick and liberal in approval.
Australia will not want to tarnish its foreign investor friendly status, especially with our largest trading partner. They will delay hoping that Miracle pulls out, probably because Rio does not want a Chinese owned Iron ore body next to their operation. I'm largely speculating based on weighing interest/benefit/loss among the parties in question.
At the end of the day the value of the deposit is established. We have a definitive feasibility study with an NPV of $250M at $90 per ton and $800M at around $120 per ton. For a life of mine of 8 years, that's a return of $30M to $100M per year for 8 years at a current market cap of $40M. This is exceptional value compared to what most ASX listed miners with definitive feasibility studies are offering. Even if we take the base case as a given, it is a great deal at the current market cap.
Yes, it is very speculative, and these figures are never 100% accurate, especially with no cash on hand and the uncertainty of funding and project hurdles which are largely inevitable as they are unforeseeable at the planning stage. Everything looks rosy on paper until it's time to get up and go.
However, the value of the offer and patience from Miracle minimises the downside to some extent (approval or no approval), as does the established track record by Creasy and his 15% stake means he has skin in the game, which incentivises him to explore all avenues. To maximise upside, it is largely about minimising downside, and these factors combined with IO price, politics, trade relations, discount to mkt cap provide me with a level of certainty that the combination of factors are stacked on the bullish side, despite what SP does in the short term.
CZR has enough funding from Creasys Yandall to keep the lights on for another 2 quarters or until end of FY, unless he extends/increases funding by then. Irrespective of the offer from Miracle, inherent value is there, although it is very unusual to see a deal of this sort where market cap is half the proposed acquisition price, especially when the acquisition is for a part and not the whole.
The deal gives some value at least, if for nothing else but to show that someone out there is willing to pay that amount for it and wait patiently while delays drag out for a year. For any other prospective buyers of Robe Mesa, I would bet that Creasy will use Miracles offer as a base case and treat the transaction in a bidding fashion, he is a shrewd old dog after all. It would be unlikely and unusual for future offers to be lower than the one Miracle has put forward.
There is also Trumps proposed ban on export of steel to Japan. So far, steel price (which largely moves with IO price) is unaffected. Trumps move to bolster the US steel industry domestically will force Japan to look elsewhere for steel. Although US exports of steel to Japan are tiny on a global scale, it takes minute changes in supply/demand to move commodity prices dramatically. This may drive steel prices upward, as an already burgeoning Japanese steel import tonnage looks elsewhere to meet demand. Along with other tariffs, this hostile shift may see commodity prices rise across the board, which may attract further interest in securing supply for IO. Alternatively, Japan's demand for steel may plummet and the reverse effect takes hold, possibly due to cooling demand due to the trade war.
Can Trump's proposed tariffs revive the steel industry? - ABC News
“I am totally against the once great and powerful U.S. Steel being bought by a foreign company, Trump said in a post on Truth Social, pledging to make U.S. Steel “Strong and Great Again, and it will happen FAST!” - Early December 2024
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