eastern iron update from quarterly

Following was in PTS's quarterly regarding Eastern Iron IPO:

"Eastern Iron will acquire an 80% interest in the 15 tenements in consideration for 11 million shares and 5 million options in Eastern Iron. PlatSearch will retain a 20% free-carried joint venture interest in the tenements. Eastern Iron is at an advanced stage of preparation of a Prospectus to raise funds and to list on the ASX. There will be a priority offer to PlatSearch shareholders."

I am not so much interested in the priority offer to shareholders as I expect there will be a minimum amount all shareholders will be eligible for and therefore despite the amount of PTS shares I have, I will get nowhere near what I apply for.

I am more interested in the value this will create for PTS over and above their already significant asset base.

If we assume that like WPG the EI issue price will be 25c, then that will create another $2.75 million in shares alone not taking into account the options.

Not only that, PTS will retain 20% interest in the iron ore project, free carried.

Unfortunately the market at the moment is very soft and so any IPO will most likely be hit with selling...however given that its an iron ore based play hopefully there will be some support. Regardless the project looks very interesting...there are significant technical issues that will need to be addressed, not to mention transport issues, however if the tech issues can be addressed adequately, this could be a massive opportunity.

If I include the Eastern Iron value at 25c per share, then PTS's investments in WPG, Eastern Iron and Chesser is equivalent to around $12.2 million. Their mkt cap is around $14.6 million so their cash (around $1M) and free carried Joint Venutures (of which there are about 20) are valued at around $2.4 million.

I am also of the opinion that WPG will eventually recover alot of the ground it lost since its disappointing port access announcement in December. The iron ore is STILL there though they do need to find an alternate port route (though they have not yet comletely ruled out Whyalla). A recovery in WPG will do wonders for PTS shareprice.

Cdchi1