I posted this back in March, might give you guys some food for thought...
Hi Everybody, I have been investigating the likely profit margin on FMS PIOP assuming that everything goes to plan. I have assumed that FMS could eventually raise the $1 to $1.2 Billion needed for the Mine.
http://www.stocknessmonster.com/news-item?S=RTA&E=ASX&N=784974
Do these figures sound correct?
FMS Total CSR landed in China A$66/t (US$53/t)
Interest on loan for FMS Mine @ cost of $1 to 1.2Billion @ 10% around $6 per tonne assuming 20 million tonnes shipped
Total cost AU$66 + $6 =AU$72
Flinders will pay The Joint Venture a price
participation fee of 30% of revenue derived from
ore sales in excess of A$60
So if the costs are around $72 per tonne and the JV get 30% of the revenue above $60 and the ore price is $100 then the JV gets an additional $12, but FMS has cost of $72 + $12 = $84, FMS receives a profit of $16 per ton. If the IO price drops to US$80 around AU$88 at the current exchange rate, the profit would be about $8 per ton
The agreement, conditional upon completion of Bankable Feasibility Studies confirming the viability of the mining and infrastructure operations, all necessary approvals, final investment decisions and the execution of Services Agreements, will result in The Joint Venture providing rail services, port handling and ship loading services to Flinders for its iron ore to be mined at the PIOP
Parties to fund own costs in relation to completion of BFS (estimated A$25M for FMS)
Raising $14.3M from Share Placement, shortfall of around $11M
Cash at 31 December 2013 $1,723,000
Company costs for period Jan to Mar 2014 (1,276,000)
Leaves a Balance of $447,000 by end of March 2014
Cash following Placement and Entitlements Issue $13,966,000
So I suppose the first challenge after the CR is to somehow raise another $11 Million for the balance of the BFS. I am still watching the Share Price closely to see when is a good time to jump in. A Crystal Ball would be handy to gaze into the Future IO Price, I found the article below which is a bit concerning
A plunge in the price of iron ore has prompted Citi to downgrade its expectations the earnings of BHP Billiton and Rio Tinto this year.
The investment bank has joined Goldman Sachs in tipping the price of iron ore - Australia's most lucrative export - to crash to $US80 a tonne within the next two years
Read more: http://www.smh.com.au/business/mini...s-says-citi-20140303-33yfl.html#ixzz2vKrp89iu
Best of luck to all Holders
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I posted this back in March, might give you guys some food for...
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