Hawsons Iron IIR Research Note, page-3

My thoughts from a quick read of this report:

The report is saying that the Market Cap of Hawsons when in production for 10mtpa adopting US$130/t for 65%fe is $6.2B.

Given the current stage of the project, the value should be around 30% of that the $6.2B, but allowing for expected future share dilution on capital raising for construction funding to work out a current fair value share price.

The per share price when in production is expected to be $2.81 (based on above metrics). Fair value for the current share price would be $0.869, given current stage of project.

The shares on issue when in production is expected to be 2,229M.

Whilst the iron ore price will have a significant impact on the future share price, I think table 13 on page 17 highlights what will have an even greater impact.

That is the price at which additional capital is going to be raised and therefore the impact of dilution from capital raising for construction.

The modelling in the valuation assumes additional capital will be raised at $0.50 per share.

However, if management can raise capital at $1 per share, the future expected share price jumps to $4.06.

On the downside, if they could only raise at 20 cents, then the future share price drops to $1.42. I think this is too conservative given BFS funding was raised at 15 cents. However, even at this conservative level it is still a potential seven times increase in a couple of years.

Remember this is all based on 10Mtpa. Value and share price assuming 20Mtpa would obviously be materially higher.