KEY FINDINGS FROM KPS STUDY- Defined mineral resources...

KEY FINDINGS FROM KPS STUDY

- Defined mineral resources (Indicated and Inferred) is now approximately close to 400mil tons of average grade 69.8% Fe.
- Identified extra potential resource which will need to be drilled out to be proven and will take the total resource to 576mil tons at average grade of 69.7% Fe, which is still the highest final Fe concentrate grade in the world.
- There are 3 main pit sections for mining: the Main pit, the Link and the Fold (Fold is the shallowest section and is the best section to start the mining with the least amount of overburden to be removed and thus reduce the cost of of waste stripping).
- Optimal cut-off grade for resource is found to be at 6% DTR. But the majority of grade is between 8%-18% DTR. Interestingly, the report found that NPV of the project does not change much or is not effected much whether you choose to move the cut-off grade higher from 6% up to 12.5%. This is great IMO.
- At 6% cut-off grade, the Average grade of the whole project is at 13.1% DTR and the all-in-cost is at USD $61.3/ton.
- NPV 8%, with 10mil tons per annum for 20 years, at exchange rate of AUD/USD = 0.75, at average all-in-cost of USD $61/ton and average long term Fe62% selling price of USD $100/ton is equal to above AUD $9billion.
- The KPS study clearly said that to achieve 10mil tons of product per year, over 20 years LOM, which total 200mil tons of product is easy and Hawsons has plenty of ore to achieve that. What it means is Hawsons project can achieve higher than 200mil tons of concentrate. I guess this is to be explored further in the BFS.
- Selling price of USD $100/ton was fed into a mathematical formula to generate a corresponding selling price for Fe69.7%-Fe69.8% at around AUD $172 - $AUD $177 per ton which is very conservative IMO because AUD $172 is equal to USD $129/ton but lately when Fe62% was equal to USD $100/ton, Fe65% was equal to USD $127. Mathematically, Fe70% price should be = (($127-$100)÷3×8)+$100 = USD $172/ton. Conservatively, it should be at least USD $150/ton, not USD $129/ton. Therefore I say that NPV of above AUD $9bil is actually based long term Fe62% price of around USD $85 - $90/ton.

- The NPV of above AUD $9Bil is essentially based on current defined resource of approximately 400MT (Indicated and Inferred) and not relied on potential of another 150MT-250MT which need to be drilled to be proven.

There are so much important information in the KPS study and everyone should read. It is a must-read. You be surprised how detailed the report is.