re"cap" on fundamentals

Given things seem to be a little quiet on the news front as we patiently wait for announcement re JV partner etc, I went back to double check the fundamentals of Hawsons and why I continue to hold (I would consider accumulating more if CAP wasn't already such a large percentage of my portfolio).

Source is primarily presentation at SA resources conference, announcement on 1 May 2012 - even better listening to Nick's actual presentation via BRR http://www.brrmedia.com/event/96743

* Hawsons will produce 5mtpa ramping up to 20mtpa at magnetite at 69%Fe.
* Estimated costs in China are US$63-$68/t
* Sale price of magnetite at 29 April 2012 was US$161.81 (do the math on the margin and tonnes per annum!).
* Fe prices have dropped US$15 to US$20t since then, but despite alleged doom and gloom with a China slow down, prices have once again stabilsed (margin times tonnes per annum still very impressive!).
* PFS with an NPV of $3.2billion and IRR of 23% is based on life of mine price of US$87/t.
* Access to existing port, rail, water and power (not many other iron ore start ups can say that, and for many others, that their road block to production).

So what is the down side risk for a potential JV partner coming in? Probably the risk of a drop in the iron ore price.

To reality check this, current price is well above cost of production (which based on revised grinding could go down) and current price is well above PFS life of mine price. Whilst prices seem to be holding comfortably above $100/t, what about a worst case scenario - I thought I'd use post GFC lows. From graphs I could access, post GFC lows for 62% Fe seem to be in the mid to low $60's and given Hawsons is 69% the premium should apply which was approx $15/t per Nick's presentation so our sell price should be high $70's (happy to stand corrected). Even this worst case scenario is above landed cost in China, but in such a slow down there may be cost savings in shipping etc.

Therefore, having rechecked the fundamentals, I can't see why CAP won't be able to attract a quality JV partner and believe they will do so - but it may take some time to have all legal agreements signed off including the tick of approval from the liquidator (who may want to get his own legal advice given the $'s involved).