Hi Nextime,From the Esperance port website under...

Hi Nextime,

From the Esperance port website under MUIOF:
http://www.esperanceport.com.au/muiof.asp

"Further, to determine the likely commercial viability of the mining companies the Project Team sought information on the -
•
quality of each of the miner’s reserves and the likelihood that its ore will be ready for export on time and in the quantities expected;

•
willingness of the miner to enter into a suitable take or pay agreement* in respect of the MUIOF; and

•
credit worthiness of the miner and its financial ability to support take or pay agreement commitments.


(* A take or pay agreement relates to a company providing an agreed quantity of iron ore to the MUIOF over a specific contract period, and if that amount cannot be achieved the company still pays for the provision of the facility’s services.)"

Check out Wikipedia it gives a good definition of take or pay as well.

Credit worthiness gives me a question mark with FAS although so far no calling in of loans has occured for some reason. However a lot of the others have pretty serious issues with being ready and able to sign a take or pay arrangement for early 2015 ie no finance in the wings mentioned to the market anyway ready to rock and roll etcetera on that front the only miner trying to get some serious cash is FAS and the others supply chain to the port is a lot longer and uncertain. So if logic holds out at ESPL MUIOF review panel then final proponents review level we may stand a chance ;)

The take or pay finalisation is Phase 4 which would be assumed to happen around Sept - Jan ie in the window after preferred proponent is announced in September and them beginning construction in Early 2014. The sooner the better as mining companies need to be able to have ore at the port start of 2015 which is a very tight window to go from nought to 100%.

My view point which is purely speculative was if FAS got through to the short listing of three potential proponents would they not potentially get an early sign on take or pay contract with the other two proponents regardless?

Also don't forget they were the only one that sought out a MOU to build port infrastructure back in 2008, if they have an truly innovative port solution as claimed in one asx market update and it blows away the review panel, nothing is impossible. Would they want to operate the port operations i'd say probably not but they may facilitate the infrastructure side of a winning tender through FRL with a known port operator and have some sort of repayment agreement in place between infrastructure provider and operator. The mine at SHIP is quite simplistic so it doesn't need $300m to get up and running either. I'd say not much more than $100m for stage 1.

Anyway that's enough from me,I'm going to patiently wait out May and see what occurs with the 3 short listed proponents. Don't want to ramp up FAS and it already feels like i have, given their current financial status being absymal and any sane investor would be worried it could just as easily blow up in their face. You'd reckon in almost 4.5 years of talks on port infrastructure they would of come up with some ingenious way to do more with less etc. That's hard to match from anyone who's jumped in the last half year to do a tender for infrastructure & operatorship in one gulp but who knows. It also explains why they aren't giving much information up doesn't matter if you try and visit KR or not he knows the game. I'd love FAS as an underdog to pull through but that may just be my greed talking.

As always DYOR and come to your own speculations and postulations.


Cheers