Will junior IO producers ever get fair value?, page-19

Hi Ned,

To answer your question about what impact the quarterly have on the SP of FEX we can look to the chart below. My reading of this is that it had a very temporary impact unfortunately. You can see the excitement in the market where the FEX SP (candles) separates from the IO price (blue line) a few days prior to the report being released. The green circle shows where the separation started. The orange or perhaps the red circle shows the point at which the excitement of the 4c wore off the SP started to follow the IO price again.



You always said that you thought the market needed a couple of quarters of proven performance before it would rerate FEX and I cringed every time you (and others) said that - I thought the first 4c had to be worth something. But I think you guys were absolutely right. I hope that the next quarterly will be enough for FEX to prove itself to the market and give it the rerate that it deserves (basically we are talking about updates to the valuation models that are currently controlling the price).

At the current IO price we will be adding 6.5c per share in cash to our bank account every quarter. At some point the market has to acknowledge this and 6.5c will be added to our SP every quarter - not a bad return. Even at an IO price of $140 we will be adding 3.5c per share in cash (and therefore SP) per quarter.

ALL IMO DYOR.