I'll have a back of envelope stab at value . I'm happy to be corrected . I'll stay conservative .
I will work with a $2 per tonne iron ore price in ground
(reality is it is closer to $100 per tonne).
$2 multiplied by 300 million tonnes (I have decreased the estimated ammount because they have some work to do to prove it higher)
= $600 million
multiplied by 56% Fe
= $ 336 million
+ $ 8 million (1% royalty from FMG capped at 8 million tonnes on board sale price)
= $ 346 million
multiplied by 50% discount to take into account risk and time
= $ 173 million
divided by $89 million market cap (22/11/2007)
= 1.94 times
Therefore 8.9 cents (closing price today) multiplied by 1.94 to reach MY market estimate
= 17.5 cents estimated conservative valuation .
Going out tonight so won't respond till later .
Ciao .
FDL
flinders diamonds limited
