update, page-14

CAP has clearly been dragged down with the iron sector during this price fall; its easy to forget that CAP will be a long term producer at under $50/t provided they can arrange a slurry facility at an appropriate port. Long term 69%Fe prices will not drop below $70/t simply because of market equilibrium mechanics. There's no question that Hawsons will be a profitable operation.

Despite this, CAP still has three risks attached to it:

1. They must finalise a transporting and porting plan for Hawsons.
2. They must finalise their working interest in the project; either by (a) buying back BMG's share for $13M and going at it alone with the help of CAPEX debt financing or (b) JVing with another firm along similar terms to the previous venture.
3. If they go with option 2a, they will need to raise working and development capital within the year, and it will have to be up towards the $20M mark in order to buy back BMG's share and fund the BFS. Not a nice scenario, so I'm sure NS will be working hard to achieve 2b instead. Unfortunately it seems like Ample Source are more interested in a bigger stake in CAP rather than JVing to progress Hawsons. A JV partner will likely have to come from elsewhere.

Sort those out, and its sunny days.