screaming buy, page-3

Can't blame the buyers for not rushing in, 12Mtpa and with a 2% royalty this is a bit of a "nothing" deal. We can throw around NPV numbers as a total amount, but at the end of the day it costs about $20 Mill p/a just to run this company & if the Iron Valley deal only delivers around $20 Mill p/a of cash flow... All we have done is guarantee the management team their salaries for the duration of the mine life.

Even if FMG ramp up production to 40Mtpa from IV as some have suggested, at 2% it's an ordinary return given the mine life would be reduced to about 4-5 years. Not sure who wants to buy into a deal with such a short shelf life.

I don't subscribe to the idea that the NPV from this deal could somehow underpin the share price. Firstly it's simply too far away from happening and secondly this deal needs to be valued for it's year-on-year input to our coffers rather than it's total value over the course of 10-15 years.

On the other hand, at 5% royalty this is a ripping deal. We've seen some numbers crunched on other threads showing the potential cashflow at 5% and it's certainly worth hanging around for.

Clearly Mr Market wants some clarity around the royalty before deciding that IOH is indeed a screaming buy (or not). Let's see what information flows over the next few days/weeks but I personally will be very disappointed if the royalty return is not clearly spelled out as I'm sure Ryan Stokes knows exactly what it is and therefore Kerry Stokes will also know the details of this deal.