RTA A/R: PIOP underpins BB Mine viability

I said this yesterday:
"...There seems to be two aspects re Export facility. There appears to be a business case for the RTA mine, its production, transport, sales and subsequent export overseas.

There is then the separate business case for the export of 3rd Party I/O thru the proposed Export facility.

And I think this is the important aspect for we FMS s/h.

I think that the BBJV business case would show some level of profitability, BUT that the inclusion of the FMS ore thru the existing BBJV export facility must show a disproportionately higher profit.
That is, one might well find that the deal with FMS makes more money than the BBJV mine and export?.........."

NOW it is confirmed by RTA in their A/R released today.

"....The Alliance Agreement with Flinders
Mines underpins the viability of
the Balla Balla Infrast ructure
project. ..."



Recent deterioration in the
iron ore market has made the
development of the BB Mine
economically challenging
on a standalone basis.
The original design capacity
for the BB Mine transhipment
operation was for up to
10Mtpa however significantly
greater installed capacity
was required in order to
economically load cape
size ocean going vessels.
Consequently, this opened
up opportunities to utilise
the excess capacity at the
proposed transhipment facility.
The proposed Port Facility is
based on using the identified
excess capacity for potential
third party participants.
Discussions were held with
Flinders Mines Limited
(“Flinders”) to utilise the excess
capacity which culminated
in the signing of an Alliance
Agreement. In securing
Flinders as a foundation
customer, it was recognised
that the BBJV was in essence,
pursuing two separate, but
related, projects – the BB Mine
and BBI. The development
of BBI is estimated to reduce
the direct capital expenditure
requirements for the BB
Mine by approximately
$400 million, thus potentially
enhancing the prospect
for future development......."   !!!!!!!!!!!!!!!!!

So there it is customers.
We now have confirmation from RTA ( not our own company I might add) of the vital importance of PIOP (and therefore Flinders) to the viability of the BB Mine and Export facility !!!

So to us s/h, I think this admission (or confirmation) is of the utmost importance.

It will give us a guide as to possible moves by Todd.

We can see from FMS Qtly that FMS will need further funds next calendar year.

Do you know that the Alliance Agreement (I think) provides for both parties to reach a BFS by June 2015. I think there is provision that if FMS determines that the BBI proposal is not in its best interests, or if BBI does not come up with a satisfactory Infrastructure proposal, that FMS can then look elsewhere for its transport and export solutions. Note: I am not clear on this, but I think there are "get-out" provisions!

So how happy would Todd be to see FMS go say with Aurizon or someone, on another infrastructure deal????

Hence Todd's 10% in FMS !!

So when FMS needs funding to complete its BFS, and beyond, who will put up their hand to contribute equity?? (in order to ensure that FMS toe the line).

Also, how much sense would it be for RTA and FMS then to merge?