The very next sentence they say "As such we believe a joint venture structure (similar to Rio Tinto with Hancock for Hope Downs), or a divestment for cash plus royalty, or a clean royalty or cash sale, are options being negotiated by IOH."
Interesting the mention of Hope Downs which is a 50/50 joint venture and which leverages RIOs existing infrastructure, but ongoing commitment by the JV partners to fund the development of mines on a 50/50 basis of course. Presumably with a circa $100m cash war chest this type of deal, where capex is minimised by utilisation of exiting infrastructure where possible and partnering with a major player, is probably a best scenario outcome for us. As such perhaps OE are saying that significant capex wont be spent on IOH in its own right in 2012 which is somewhat obvious? Particularly in terms of where we are at currently with the PFS process.
Even still, a cash plus royalty deal would imo be a significant rerate for us from these current SP levels i.e. say a 2% royalty on gross sales equates to around $2.90 a tonne alone, a significant premium over what IOH is currently valued at on a EV/t basis.
No mention of Anketell as well. Seems a bit quiet on that front but lets not forget IOH have stated publically as well that they have been lobbying the WA government on junior miner port access on a use it or lose it basis.
At the very least I hope 2012 is one where finally the IOH strategy is taken to the next step...
IOH Price at posting:
$1.58 Sentiment: Buy Disclosure: Held
