ouch - fin rev – unlikely fmg will exercise iv, page-5

While I understand peoples concern and worry re IV falling over, I do feel that there was a certain level of disappointment (me included) at the depth of the deal. I think we all tried to be supportive because it seemed the only way we could get IV moving.

Well, the past 12 months has proved to be very enlightening IMHO. With the hope on Anketell rail and port fading as 2012 went on, AV and team were working hard behind the scenes crafting plan B's.

"Plan B's are not failures", they are viable alternate options.

So we were faced with something (don't know what) from BS, a 2-5% royalty from IV (don't know what the deal there was either).

We now have investments being pulled, projects being cancelled, project costs now falling (due to reduced demand). Things looking really glum. WA gov wondering where it all went wrong.

But is it all bad for IOH?

IOH are looking at 4-8MT pa (BS) projects and now (maybe) IV 5Mt pa project.

While rail and port are at a premium, IOH with their cash position is going to be around for a while and their bargaining power is increasing all the time IMHO. FMG sold 25% of BCI project, they want to consolidate as much as possible (ie want all the cash they can get).

Lets renegotiate with FMG, they are certainly now open to it.

So imagine, while I know this is a big assumption, it is certainly possible, IOH secure road and port for BS project and a good rail deal with FMG.

BS:
First ore on truck Q1 2015 = 4mt pa
200t payload trucks 2018 = 8mt pa

IV:
First ore on truck 2014 = 5mt pa.

I know there is a ramp up but I'm just trying to keep things simple, IOH is looking at 5mt pa 2014 to 13mt pa 2018 onwards. This would be with JV partners and it would be progressive AND its a number of years away.

But its 2 x plan B's that could actually make some cash. ~$50/pt FOB @ $90pt = $520m MILLION divided by 2 (JV partners) plus payments for borrowings etc, surly that will attract interest.

I certainly havant given up hope, I would actual prefer IOH to mine IV, they would do it well and profitably and be in control.

"Plan B's", sometimes they're better than "Plan A's".