in ground value of hematite at tenement 882

matchbox20,
I thought I'd start a new thread as the last one was getting too long.....
The in-situ value appears to be more than the $2 tonne referred to in the earlier post, from what I have read in the ocean equities report. It appears a conservative method of valuing in ground hematite is based on $4.1 a tonne ( as opposed to a benchmark method which uses $10 per tonne Fe content or generally, $6.1 per tonne).
Given the confidence in finding 300mt at Flinders 882 tenement ( which should be clarified as drilling results come to hand), using the more conservative figure of $4.1 x 300mt is $1,230m divided by the 1,111m Flinders shares on issue gives a price per share of in ground value of the Flinders hematite (before value adding through production), of $1.10 per share. That is, if Flinders prove the resource, and decide not to mine it and decide to sell the resource.
This will be diluted depending on how many options get converted next month of course. The latest 3B, on the 6th of this month shows about 363m options exist which if all are converted , would see about 1,474m heads. The new figures would be $1230m divided by 1,474,000,000 or about 83 cents per share without adding the new tenement value. If it has 300mt as a guesstimate, the value per share could be $1.66 for the in ground hematite if everything pans out.
If the new tenement acquired from Cazaly proves to have a similar JORC resource, the value per share for the combined resource based on $4.10 per tonne is $2.20 per share.
It's worth a lot more per tonne of it is mined ( about $40 per tonne as opposed to $4.10 per tonne) but there is of course a lot more capex and finance required and a much longer period before revenue from sales is achieved.
With Fortescue starting to design and moving forward with plans to construct the rail spur to Solomon, I'd expect that there would be a lot of Flinders shareholders who would be more than happy to accept a sale of the ore straight to Fortescue based on its inground value without having to go through a capital raising. I know I would anyway.
These estimates are for the Pilbara iron-ore only and have not included any corporate value for the company eg, cash, other tenements, other shareholdings ( like MXR) or any other FMS tenements etc.
As always, please DYOR.

An extract from the Ocean Equities report that talks about the in ground valuation methodology.....

......."5.0 Valuation update
While we have not undertaken a detailed valuation analysis company by company we have attempted to provide the framework for the most common valuation methodologies used:
• In the ground valuation – while we acknowledge the inherit shortcomings in applying an in-situ per tonne value (discussed further in Section 5.1), we find it useful to gauge the valuation the market is currently applying to Pilbara juniors. This methodology is often used by analysts and investors alike because the level of uncertainties regarding the development of the explorers/developers respective projects and time horizon to production (and cash flows), means that exact valuation of these company’s is problematic and the selection of an appropriate peer group provides a proxy for the valuation the market is willing to pay per tonne of resource (or target resource). Company’s with proven management teams that have experience of delivering on stated targets; with projects that are closer to production; with higher grade/lump deposits; which offer blue sky expansion potential; and have infrastructure access secured; should trade at a relative premium. Therefore care must be taken in selecting an appropriate peer group but we believe the opening up of rail access in the longer term should result in a narrowing in the potential valuations across the junior sector. Two common ‘in-the-ground’ valuation approaches are used:
1. Benchmark $10t Fe content. This is a rule of thumb metric and best explained with a simple example. Under this methodology a company with a 100mt resource grading 60% Fe would have a market cap of $600m, ie 100Mt (resource) * 60% (Fe grade) * $10t (benchmark valuation) = $600m market cap. This approach takes into account lower grade deposits so care must be made to appropriately adjust for lower grades that often result in a higher capex profile and lower average selling price.
2. Current peer based EV/t. From the analysis we present in Exhibit 12 the market is currently applying a median peer multiple of $4.1/t EV/DSO resource (which we believe is more appropriate than the average of $6.1/t). Under this methodology a company with an existing 100mt DSO resource (or visible near term resource), would have a market cap of $410m. This analysis only applies a multiple to high grade Direct Shipping Ore (“DSO”) resources which generate premium margins and returns relative to other deposits (again refer to Section 5.1 for further details). This is our preferred peer based valuation methodology because it is more conservative than the benchmark approach.".......

Best to DYOR and read the full report though. cheers Fatstocks.