Whilst I acknowledge the heading ofthis thread will seem like a pump, if you care to read this post I believe youwill see my thoughts are supported by some research and logic.I accept others may have some different views, and I may be corrected on some points, but thought I would put my thoughts out there and see what discussion it sparks (and hopefully get some researched responses if I have overlooked anything significant).
The following sets out my thoughtswhy I genuinely believe that this could be your last change to buy Hawsonsshares under 5 cents:
·Regal – The weight of Regal’s selling has been puttingpressure on the share price for two reasons.Firstly, the number of shares they have been selling and they appear to have been selling into any upward price movement.By various estimates Regal are down to around 10 million shares and therefore this weight will soon be lifted.
·Capital and start up costs – The BFS was halted lastyear due to unexpected increases in capital costs.Recent announcements have confirmed that the heat and volatility has come out of capital costs.Further, revisions to the processing plant are further reducing capital costs.Confirmation of near surface ore also means less initial overburden removal costs.This all goes to reduce the start up costs which were the reason for the BFS being paused.
·Project Investor Information Memorandum – expected inOctober 2023.I would not expect the board to be moving towards producing this document unless the project economics stacked up – therefore I assume that the project economics are viable and investable.
·Interim Executive Chair – Many, including myself, arenot a fan of Bryan holding this position (as opposed to the Chair and MD beingheld by different people).It was announced as an interim measure.I would therefore expect to see it resolved prior to the AGM.This would be another step in rebuilding the confidence in the board.
·BFS Funding from strategic partners – In the periodprior to the BFS halt, the attitude of management appeared to be more of a “goit alone” approach rather than take on a partner, offtake or similar.The recent announcements appear to be stronger each time that BFS funding will come from a strategic investor/s.
·Cash at Bank – I would estimate that Hawsons will haveat least $5M cash at the end of the September quarter ($7.2M at June).Therefore, there is no need for a capital raise in the near future and enough cash to get the investor memorandum out there and do a deal or two with strategic partners.
Arethere still risks?Of course there are. But there is lots to mitigate those risks as well.
Thebiggest risk is obviously BFS funding.
Longterm shareholders will remember the Mitsui deal announced in 2018 where Mitsuiwere willing to provide 20% of BFS funding and a US$60 million contribution toconstruction funding in exchange for 2 Mtpa offtake.Back in 2018, the term “green steel” was not being used and the focus to decarbonise the steel industry was nowhere near as urgent and important as it is now.
Now,we have letters of intent for 58 Mtpa but only planning on producing 11 Mtpa.
Therecurrently exists a way to produce green steel in commercial quantities withknown and proven technologies and methods.That requires an Electric Arc Furnace (“EAF”) powered by green electricity.High grade magnetite is the perfect feed for EAF. Whilst other technologies are being developed (such as hydrogen) they are still developing.Therefore, most of the other options to produce green steel contain some uncertainties and risk and require lots of capital to develop.
Theworld wide supply of high grade iron is limited and even more limited is highgrade iron suitable for EAF and making green steel.
Therefore,if you want to produce green steel using known and proven technology andprocesses, you need to get your hands on some high grade magnetite.
Itherefore believe that those that are behind the organisations that have signedsome of the 58 Mtpa letters of intent will know more than any of us the strategicbenefit of getting their hands on some high grade magnetite.
IfMitsui was willing to provide 20% of the BFS funding back in 2018, I would besurprised if there would not be some level of competition to secure an offtakeand therefore provide Hawsons with BFS.Although BFS funding from strategic partners is a risk, is definitely a realistic option to get the BFS funded and started again without raising capital via share issues.
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