Iron ore price, page-66

I think we should be pretty happy that TI1 has finally bounced back and is in a steady rise. Like your comparison with FEX; very similar companies albeit TI1 is about 6 months behind in mine development terms.

I looked at both their MCs awhile back and even today you could be surprised that TI1 has an MC of about $104m v’s FEX at $138m. On a share for share basis a TI1 share is undervalued by about 30% and that if FEX and TI1 are equal in value a TI1 share should be trading at around 7-7.5c. In the short term TI1 needs to provide some real clarity around sales arrangements and give the market a sense of comfort that they can deliver consistent product to multiple buyers when rates dip below the todays levels.

I think they have huge potential but am concerned they haven’t quite sorted out the selling part of their business. As for a dividend, I suspect they can afford one which would be great but imo it will be around the 0.5-0.75c/share range and unfranked. This is smaller proportionately to the FEX dividend but we must remember FEX has sold ore right the way through the dip whilst TI1 didn’t and in fact continued to incur costs as they kept mining.

I would love to be proved wrong on so much of my assessment but am struggling to find indications which contradict it. My sentiment has moved from buy to hold as their SP is probably not a million miles from where it should be and should appreciate further when news of good progress is provided in their next update particularly realising the cash value of their stockpiled product which has cost a significant amount to produce.