according to Fosters....n Ore Holdings (IOH. ASX; $0.76/sh; Mkt...

according to Fosters....

n Ore Holdings (IOH. ASX; $0.76/sh; Mkt Cap $122m) – Iron Valley approval imminent. BUY PT $1.90

•Final mine approvals are closing in next month, with IOH not expecting any delays given the success of all approvals to date – both from a mining and environmental perspective. The approval will trigger the start date for Mineral Resources (MIN) to bring Iron Valley into production within 6 months are start making mine gate payments to IOH.

•Iron Valley mine gate deal is expected to generate significant cash in 2014 to assist with co-development funding requirements for Buckland Project or provide an opportunity for capital returns to shareholder.

•Mineral Resources will develop and operate the Iron Valley mine at its own costs within 6 months of IOH receiving final mining approval, which is expected to occur in the mid-year, and buy a minimum tonnage of ore produced from IOH at the mine gate.

•Our conceptual model indicates that mine gate sales could conservatively generate $30m EBITDA in CY14 as production ramps up to 2Mtpa in the first full year of operation (US$115/ Fe & AUD 90c). IOH have indicated a run-rate of 4mtpa could be achieved from year 2. Should 2mtpa be achieved in 2014, this would put IOH on an EV/EBITDA of just 1.7x vs 3-4x for a producer.

•We continue to rate the stock a strong BUY with a clear path to cash flow imminent. Further news on a funding and development option for Buckland project is also expected to follow in the 2H of 2013 to provide a second catalyst to re-rate the stock above $1/sh. Cash backing remains a healthy $70m, the register is very tight in the top 20 with 75% and any overhang from recent selling appears over.

•We rate the stock a BUY PT $1.90.

http://www.fostock.com.au/announcements/paladin-energy-pdn-asx-iron-ore-holdings-ioh-asx