Good comments Chezd, Smuck & 1912My previous rough calculation...

Good comments Chezd, Smuck & 1912

My previous rough calculation $0.73/share is very conservative based only on $0.20/t. I do think ROY should be around $0.4-$0.6/t (not per share), given how much AGO focused on taking over iron ore explorers with infrastructure. Last placement was done at $0.185 by oversea investors who are fully aware of EU situation, so I certainly do think ROY should be much higher than $0.185. As I said before in my previous post, ARH can manage $120m market cap with 1 Bt, ROY should do better with 1 Bt.

However, I am concern about project funding because after GFC Chinese became more value-driven rather than spend like drunken sailors, eg before GFC Midwest got takeover at $5/t (undeveloped mag iron; this would value ROY at $2B+ or $7/ROY share) & CITIC paid $400m for 1Bt mag iron (+ paying royalties to owner). After GFC, Chinese are driving hard bargains, so ROY's PFS IRR (Internal Rate of Return) needs to be very good (30%+). MMX share holders certainly got caught by that, while Midwest share holders are laughing all the way to the bank.

In an extreme wild thinking, AGO might want to control this entire SA iron deposit (ROY, HAV, MEP, CAP/BMG etc; they all tiny companies) 100% monopoly in SA like BHP/RIO/FMG in Pilbra, ie controlling railway, 3 ports in SA with exploration area from Adelaide to Broken Hill (400 km length). According to MEP's old presentation, this region contains 40 Bt magnetite & 150 yr mining at 250 Mtpa, so need someone who can internally fund all mining projects.

Australian government Vs Chinese government

Chinese government supports Chinese banks & Chinese banks fund many projects in Australia via Chinese steel companies. Chinese companies in the form of JV partner will drive hard bargains (eg get some cheap shares) in exchange for project funding.

What about Australian government & Australian banks? OZ banks will never fund those projects, they are only interested in account-keeping fees & home loans. Account-keeping fees are unheard off among Chinese banks. The Greens complain about foreign ownership, but yet Chinese companies are taking the risk, providing funding & of course they should take shares in OZ companies at bargain prices.

IMO Australian government should setup $100B fund that funds small Australian mining projects (micro-companies that are cash-poor) with very good IRR, instead of letting foreign companies provide funding & own them. Benefits to OZ:

1. More mining jobs created; 2. more tax collected; 3. more royalties to State;
4. use OZ steel/equipments & construction companies & workers (vs Chinese & Indian companies bring their own workers);
5. ownership of projects stay in OZ;
6. government can collect interest payments (eg gov with AAA-rating can borrow at lower rate & charge micro-mining companies higher interest).

Instead WA Preimer went to China bagging for Chinese money for MMX's railway... he got caught with pants down, if he dances a bit he might get a few dollars.

Greens complain about foreign ownership, workers & eqipments/steel. Chinese companies have the rights to use Chinese workers, construction companies & equipment, BECAUSE they own the project by providing funding.

Instead of taxing more (ie mining tax), Australian govn should provide funding to micro-caps with good projects & this will benefit all Australians & our future generations.

LOL vote for me for the next federal election...