Some interesting and very large numbers there Iman.
As I have posted before, I think the reference to the AKI type scenario is very pertinent here (especially given that Burston and Ariti were major factors in that deal).
Assuming that EIO raise approximately $20m at the 35c Fostock price target in October (after maiden JORC is released), that adds a further 57m shares to take it to 297m, plus about another 15m options, so all up 312m shares. Into an AKI type deal of $367m (as they got $338m for their 92% owned project) that would be almost $1.20 per share.
Given that 300km of rail is already there and another 30km will be ready Q1 next year (leaving just 60-70km to be built at the northern end to the deposit, for around $150m) I think an AKI type deal could be some chance.
Regardless of whether a deal is struck that early, it might pay to look at the in-situ peer values that Fostock mentioned, where they apply about 40c p/t (of 100% iron).
So, on the 300 holes released so far, with an avg depth of 18.14m at an avg grade of 40.37%Fe (assuming an SG of 2.8), could show all-up (789 holes) that this 15 sq km drill area could host about 762Mt (536Mt indicated and 226Mt inferred), with the rest of the plateau area (approx 70 sq km) covered in this one lease, showing a possibility of a further 3.5Bt target.
This might give rise to the following valuations:
Indicated: 536Mt @ 40.37% x 40c = $86m Inferred: 226Mt @ 40.37% x 20c = $18m Targeted: 3.5Bt @ 40.37% x 5c = $70m
So, theoretically, this might provide an in-situ value of around $174m. On 312m shares, that would be about 55c per share.
Obviously any take-over premium (say another $200m to get to an AKI type deal of $367m) might come from the favourable mining and treatment costs (to be confirmed), available infrastucture, tax/depreciation benefits, plus the 24 other leases (and any other they may have in-train).
All just theory at this point but things are moving along very nicely (as shown in yday's Quarterly) and the pointy-end is now in sight.
EIO Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
