the first 2/3 of your post i am in agreeance with, what you have...

the first 2/3 of your post i am in agreeance with, what you have outlined is a very reasonable progression of events.

however i have some concern with this

"With current iron ore prices they should be making a margin of $55 per tonne (again hard to speculate but fair estimate) , earnings of approx. $550million per annum."

Current contract price for a tonne of IO is ~USD 132.00
this is the going rate for Brazilian IO, ie, the good stuff (low impurities).
Im going to say, with our IO, we are going to have to take at least a 25% discount on the going rate. AT LEAST.

Assuming you have used the same price as i have to calculate your margain (132 USD), you have worked out extraction costs to be ~$85 a tonne.

If we take out 25% discount off 132$, we arrive at ~100 a tonne revenue per tonne.

this leaves us with 15$ profit per tonne.

now if you want to exclude the first couple of years of 1MTPA of DSO and skip to full production of say.... conservative, 8MTPA, using your dilution calcs we come out with a share price of $6.40

PE. 8 x (15$ x 8mtpa)/ 150m shares

this is a realistic valuation. not this rubbish blue sky

having said that, based on my investment at 60c, i'll take a 1000+% return over 2-3 years any day of the week.