How did we get here and: Where to from here?

I like allholders am disappointed by the latest announcement. This is obviously not whatwe hoped for.

So I am notsurprised to read some pretty negative comments here, and unfortunately theusual non holders throwing al sorts of rubbish with little basis and saying Itold you so!

Ofparticular issue to me are the following comments:

1) Managementhas somehow misled us and is taking big salaries and just extending theinevitable.

2) MagnetiteIron Ore isn’t going anywhere and history will simply repeat itself

3) HIOand the Hawsons Iron project are now dead

I think itsimportant to have a look at these statements and see to what extend they arereasonable.

But firstlets see how we actually got here. I am not going through HIO’s history, youshould know this. I will however focus on the global situation that in myopinion is the main and possibly the sole reason we are now where we are.

I don’tthink anyone has missed the bad and increasingly deteriorating economicconditions and with headwinds the global economy is facing so I will give ashort sum up of the toxic mix we are currently in!

Ukrainewar: Part of the energy crisis, continues to cause great uncertainty includingthe worst case scenario Nuclear War.

EuropeanEnergy crisis: A decade plus of terrible energy policies including shuttingdown save and reliable nuclear power, killing off investments in gas, oil andcoal while investing trillions in unreliable “renewables” have made Europe verydependent on Russian and Middle Eastern gas/oil supply.

China:Continues extreme Covid policies reap havoc on the worlds supply lines and theChinese economy. An overreliance on the construction sector (30% of theeconomy) and high investment in property (70% of household wealth) whiledemographics no longer support it are now causing a huge bubble to burst. Increasingaggression towards the outside world and threats of an invasion of Taiwan addto global uncertainty.

Rest of theworld: With other Western nations to a lesser extend copying poor Europeanenergy policies and linked to this inflation out of control (with increasinginterest rates and credit restrictions) currency crisis and food crisis thesituation ranges from average (US, CAN, AUS, JAP, KOR and many other) to verypoor (most 3^rd world countries like Sri Lanka).

All theseissues which in itself could cause a serious crisis, are coming together rightnow. It is absolutely no surprise that there is massive Fear Uncertainty andDoubt (FUD) out there in all layers of the financial system.

And thissimply means getting large investments now is a near impossibility, no matterhow attractive the project. There will be very few mining projects that getfunding as long as the situation is a bearish and as uncertain as it is rightnow.

In term ofHIO, I have little doubt that only months ago they were getting very positivefeedback from both potential off take partner and the financial world…I am alsocertain that that enthusiasm has cooled markedly in the last weeks and months.

So savingcapital and preparing for a potential long wait is simply the prudent thing todo. If you own any other mining companies requiring large amounts of capital toget going you probably should prepare yourself for a similar situation

1: So thatbrings us to the first point: Did HIO management mislead us? Are they just hereto make lavish salaries for as long as possible?

For that tobe true management actually has to make lavish salaries…

$68K forthe top dogs of this company for the entire quarter…Hardly lavish at all! Infact some of these guys are working for next to nothing! Obviously they willrely on performance shares and options to actually make some serious money. Theaccusations towards management made by some posters here are very unfounded andunreasonable!

Furthermorethey have always informed us honestly and on time. There simply is no good wayto bring bad news. If they had eased into it they would have copped it as wellgetting accusations of not coming out straight with the bad news.

Everythinghere points to managements interest being aligned with ours, and them havinginformed us in due course! Unless management has sold out on Friday (and we getan Ann soon about that) they are in the same boat as us!

2) So weget to the next point: As stated by some (mostly non holders) magnetiteprojects have a poor history and the current situation is business as usualwith these magnetite projects failing as soon as there are any head winds.

Thisstatement ignores successful magnetite mining project found around the worldincluding in Australia including Grange Resources who have been successfully miningmagnetite for decades at record profits and MGT is pushing forward with itsIron Bridge project despite cost overruns (tells you something!). So thestatement that magnetite is per definition a poor business is inherently untrue!Show me a commodity that doesn’t have piles of failed mining projects.

Moreimportantly it ignore two of the biggest trends in Iron Ore and steel making.

The vastmajority of Iron Ore is Hematite. But after many decades of mining a lot of thegood and easy to dig stuff has been used. That is leading to ever dropping irongrades in hematite IO and this in turn makes the steel production process moreenergy and CO2 intensive. The push to increase IO grades is getting strongerand stronger and it doesn’t look like hematite can achieve this.

This isleading to second trend. Green steel. A very real trend with tens of billionscurrently being spent or already allocated to green steel production. Theseproduction pathways do however require high grade IO (65%+ ideally 67%+). Thereisn’t nearly enough to feed all the under construction and planned projects.

So wheredoes that leave HIO?

To myknowledge the metrics of the Hawsons project haven’t changed. Maybe some ofthose now saying we are just the next failed magnetite project can show us someof those previously failed projects with similar numbers as HIO??? Oh yeahright. There aren’t any!

Are wereally supposed to believe biggest steel producing companies in the world areinvesting tens of billions of dollars in green steel factories, only to havethem sit idle due to there being no suitable IO available?

What otherprojects are out there at similar advanced level being able to produce 69 to70% IO? Who do you think they will come to once their massive investments areunder threat of being grounded due to a lack of IO feed?

Are peopleexpecting that when the economy recovers and steel demand (which really hasn’tfallen that much yet) bounces back, that everyone will be ok with burningmillions of ton’s of coal and blowing insane amounts of CO2 and pollution intothe sky??? Has global warming resolved itself suddenly? Is the green trendover?

Because ifnot, I know a pretty good IO project in NSW Australia, just outside of thebiggest mining town with government support and spectacular financial metrics…Itmight require some patience, but boy oh boy could it be something