update, page-22

I previously noted that the PFS used US$89 for 69% Fe.

On page 13 of the annual report, it states the PFS used a life of mine price of US$78 for 62% Fe. This puts the regularly reported 62% price into context for Hawsons. Prices only droppped down to mid US$80's before bouncing back up to US$100 - well above the PFS assumption of US$78. We can expect a price higher than the regularly reported 62% due to Hawsons higher (69%) grade and low impurities.

Per CommBank's Commodities Daily Alert for 10 September (http://www.commbank.com.au/corporate/research/commodities/daily/commodities-daily-alert.aspx) "At USD 87/t, iron ore prices are now about in line with the 80th percentile on the global iron ore cost curve. For prices to remain at these levels, we expect one-fifth of global steel output would need to shut and remain shut for at least a year. This is unlikely. Latest global steel output figures suggest growth of 1%-2% for 2012."

If prices remain above US$100, then that means an extra margin of US$20t on output of 20Mtpa or US$400M per annum extra margin - imagine what that would do to the resulting NPV!

Therefore, I'm not surprised by Nick's comment on page 9 of the annual report "Due to the project’s potential long life, premium product and existing transport solution, it has attracted interest from a number of prospective partners, notwithstanding current tight capital markets."

I think our patience in holding will be well rewarded.