Look like the ones who wanted to sell at 10c and under have done so over the last 2 days, totalling more than 20mil shares on ASX and CHI-X have exhausted.
The offers at 10.5c and 11c could be line-wiped soon I think.
For the long term holders, this is a very sure bet. If this project go to production, we are looking at a very very big reward.
My thoughts are:
- Around March-April next year, we could be looking at sp = 30c after resource upgrade, pilot plant being built, EIS (Environmental Impact Statement) completed and submitted, valuing HIO at around $220mil for a big and high quality project that has NPV in multi billions dollars.
- If 1st off-take announcent is announced, we could be looking at 50c-60c, because all doubts about whether the project can or can not move to production should disappear after off-takes are announced.
- When more anns about financing and construction details emerge, MC should move past 20% of NPV towards 30%. That, by my estimate, could be 25%-30% of $4bil NPV = $1Bil -$1.2bil, giving sp a potential of reaching around $1 (based on total SOI of 1 bil shares). If the estimated NPV from the recent KPS report is correct, which is AUD $9.3bil, then sp would be double the above figures, or around $2-$2.60 sp. There is a good chance because resource utilization could increase from around 220mil tons of concentrate to around 400mil tons.
- When it is in production, sp would have a lot to gain further.
The KPS report's NPV is based on assumptions:
- Discount rate = 8%
- AVERAGE long term Fe62% = USD $100/ton
- Annual production = 10mil tons concentrate.
- LOM = 20 years
- Resource utilization = 220mil tons
- NPV 8% (average) = AUD $9.29Bil
I can see very obvious upside potential to the above assumptions:
- Resource utilization = easily increase to around 380mil - 400mil tons. Keep in mind its defined resource currently is 400mil tons of concentrate, and potential identified resource = 576mil tons, while Exploration Resource target was announced at 1.4bil tons of final concentrate throughout the 3 tenements.
- The other obvious upside is the AVERAGE price of Fe62% could well be above USD $120/Ton. This average price over its 20years-50years LOM, not price today, not price tomorrow, and not price next year.
- The big major upside is the demand for high grade iron ore concentrate due to accelerated pellets production expansion facilities being built in China and thus the increasing demand for pellets feed. The built up capacity of electric arc furnaces over the next few years will push up demand for high grade iron ore to reduce emissions. All up, high grade iron ore will be in great demand and the premium price that customers will pay for HIO's world's highest grade iron concentrate will increase and decouple from hematite iron prices.
This project was awared "Major Project Status" from the Australian Federal government and the "Significant State Development" status from NSW government for a reason.
3 directors would not have asked shareholders to grant them 16mil options just 3 months ago to purchase shares at excercise price of 25c, 35c, and 50c if they dont see sp in multiples of their excercise prices, wouldn't they?
Expand
(20min delay)