long term

$150m or $0.29 per share NPV is based on the production of 41Mt of iron ore at 4Mtpa over an 11-year life. Assumptions include a 10% discount rate, a long term iron ore fines price of US37c per dry metric tonne unit (dmtu), a lump price of US45.9c per dmtu, an exchange rate of A$1 = US$0.72 and a 30:70 lump/fines split. This equates roughly to A$35/t of ore compared to AZR's prefeasibility assumption of A$30/t for 100% fines. Capital costs for the expanded 4Mtpa case are estimated at $110m, almost double the $60m PFS estimate for the 2Mtpa case. We have increased operating costs by 5% to A$21/t, reflecting higher input costs; read oil, labour and materials; partially offset by economies of scale.

Long term EBITDA and NPAT are forecast at $55.0m and $29.9m respectively. Prospective diluted earnings per share and dividends of 6.1c and 3.0c per year could support a doubling of the share price within two years based on peer multiples.

Source: Aspect Huntley analyst estimates