ICU - Investor Centre

[INORE]

Re: FWL - Ferrowest Limited

9th July 2007
ASX ANNOUNCEMENT
RAIL TRANSPORT OPTION
Following the recent announcement by WestNet Rail that it was proceeding to investigate expansion of its track network in the mid west region of WA, Ferrowest has met with WestNet representatives to determine if there will be an opportunity for the Yalgoo Iron Project to utilise the expanded network.
The planning for the Yalgoo Iron Project currently envisages road transport for the proposed project output of 500,000tpa of merchant pig iron. This relatively small tonnage does not, on its own, warrant re-instating the rail line from Mullewa to the project, a distance of approximately 133km. No other proposals for additional rail in the mid west come within an economic distance of the project.
However, under the WestNet Rail proposal it is planned to consider re-instating the rail line that runs through the project tenements in order to service the Golden West Resources Project at Wiluna. The Company and WestNet Rail will investigate the feasibility of using this line to transport the merchant pig iron to the Port of Geraldton. Under this scenario, a 7km spur line would be constructed off the main line into the proposed plant site.
Ferrowest would need to contribute to the overall capital cost of new rail (probably through operating charges) and would therefore not expect any significant reduction in overall transport costs on the 500,000tpa of MPI currently planned but, if successful, it would have the following benefits for the Company:
• while the proposed road transport is minimal, it will lessen the number of truck movements;
• coal transportation to site will not require double handling (currently both road and rail transport); and
• any future expansion in output will result in transport savings.
The possibility of a new line through Mt Magnet and Sandstone to Wiluna being economic is largely governed by other projects that are proposing to move larger quantities of material but the Company is pleased to participate in determining an overall solution provided that the proposed rail can offer equal or lower total transport costs.
If the proposed rail line does not proceed, the Company will simply continue with its proposed road transport.
The Company looks forward to further discussions with WestNet Rail as it advances the studies for the Yalgoo Iron Project.

 

[Pommiegranite]

Re: FWL - Ferrowest Limited

Article on Herald Sun Online at news.com.au

http://www.news.com.au/heraldsun/story/0,21985,22044678-664,00.html

It's all stuff we know already, but once again, good media coverage for Ferrowest


THE good times keep rolling on for junior iron companies with some very positive announcements yesterday.
Gindalbie Metals shareholders will be smiling all of the way to the bank after the company upgraded its Mungada hematite project by 62 per cent to 22.8 million tonnes.

That led to a pretty solid 14.6 per cent upgrade to the share price of the WA miner to a close of $1.375.

Chief executive Garret Dixon said the iron grade had improved significantly while contaminants had fallen.

About 67 per cent of the resource was now classified as indicated, taking the first 10 hematite deposits drilled much closer to becoming a direct ship mine.

It was a similar story for fellow Perth junior Ferrowest, which is having an interesting chat with WestNet Rail.

While Ferrowest had planned to send the merchant pig iron from its Yalgoo iron project by road, as luck happens it may be able to get a lift by rail.

WestNet is looking to build a line to Golden West Resources' project at Wiluna which will pass right through Ferrowest's tenement.

If the figures work out, Ferrowest may be able to build a 7km spur line to take the pig iron to Geraldton and avoid double handling of its coal inputs.

While transport costs remain around the same, the rail line would improve the economics of any future expansion.

 

[serendip]

Re: FWL - Ferrowest Limited

The announcement that FWL may now have a rail transport option is encouraging from more than one perspective.

First, and most obvious, is that any such option automatically sets a ceiling on their transport costs.

Secondly, a rail link would clearly provide an economic transport system for any future expansion.

Third, more subtly, but perhaps most important is the implicit confirmation that transport costs to the port at Geraldton are going to be very low, by the standards of the industry. This is indicated by the fact that building even a short spur line, of only seven km, is expected to result in net costs which approximate those of the currently planned road transport. I doubt if there is an iron ore miner in WA that would not be head-over-heels with delight at the prospect of having to merely fund the construction of such a short section of track. FWL now has this as an upper limit.

It all helps to inject more confidence in the robust nature of the economics of the Yalgoo project.

Cheers, Serendip

 

[Fool]

Re: FWL - Ferrowest Limited

Lounge chair here is all my research

Although I originally said 60c is a target, at 60c the mkt = $51m which could turn out to be a possible 1 yr of 30 year net profit, so a PFS that showed profit of $50m p.a. for 30yrs may = a Mkt Cap of $100m, my broker thinks this is more reasonable if the PFS shows this,

DYOR

Just thinking out aloud here.

Seeing as the resource was upgraded, are we now looking at $75m p.a for 30 years?

If we are.... does that also suggest a mkt cap of $150m ? .... approx $1.80 if the PFS comes out good?

or will we have to wait for the total strike to be drilled and another JORC upgrade to see the SP will go that high?

 

[stefoid]

Re: FWL - Ferrowest Limited

The most important thing about this stock is the MPI process. If ferrowest was to get the company who designed the process in as partners? Japanese? That would be a very big deal for the stock.

If they dont get the process right, they have just so much rusty dirt.

 

[Pommiegranite]

Re: FWL - Ferrowest Limited

The most important thing about this stock is the MPI process. If ferrowest was to get the company who designed the process in as partners? Japanese? That would be a very big deal for the stock.

If they dont get the process right, they have just so much rusty dirt.

I don't think the process will be a problem at all. Kobe Steel are crying out for ITmk3 to be recognised globally.

The real 'issue' is the grades of the concentrate. However, if you compare Cleveland Cliff's grades (ITmk3 approved) with Ferrowest's samples, you will see great similarities. Therefore, no issue at all...I hope

http://www.cleveland-cliffs.com/Operations/Products/Pages/IronOreAnalysesTable.aspx


(FWL sample pdf attached)

 

[serendip]

Re: FWL - Ferrowest Limited

Thanks, PommieG. That comparison makes the Yalgoo concentrate look a more favourable feedstock than any of those shown as potential sources by Cleveland. If Cleveland Cliffs are still sufficiently convinced of the viability of the ITmk3 technology to build a 500k t/y facility, with their US and Canadian feedstocks, then the position looks very encouraging for FWL.

If the results from the test runs at Kobe Steel are available on schedule, and presumably incorporated in the Pre-Feasibility Study, we could be in for some interesting times around the end of this month.

Cheers, Serendip

 

[toc_bat]

Re: FWL - Ferrowest Limited

ok so i was wrong as usual - the sp has dipped a bit since jorc ann, i forecasted a hold or steady rise,

notice how there has been a slight sell off after 2 recent ann, lets see if i get this oe right, i think this is a few sellers who were perhaps dissapointed that the ann wasnt the pfs so they sold out,

i tried to ring the company 2 days ago t ask about the expected date of the pfs, secrtary sai MD isnt in, ill try again today,

bye all

 

[Pommiegranite]

Re: FWL - Ferrowest Limited

ok so i was wrong as usual - the sp has dipped a bit since jorc ann, i forecasted a hold or steady rise,

notice how there has been a slight sell off after 2 recent ann, lets see if i get this oe right, i think this is a few sellers who were perhaps dissapointed that the ann wasnt the pfs so they sold out,

i tried to ring the company 2 days ago t ask about the expected date of the pfs, secrtary sai MD isnt in, ill try again today,

bye all

Mate...the volumes begin traded on this stock are ridiculously low. Sometimes $20k a day. Just a few people getting a little bored and wanting to move their piddly amounts elsewhere

I wouldn't read anything into this. I think this stock is now at a crossroads, with those believing in a positive PFS already onboard, and those who don't are already out

 

[Pommiegranite]

Re: FWL - Ferrowest Limited

In The Australian Online yesterday. Not too many with infrastructure as ideal as Ferrowest's

Rule of iron: get access to structure

IN the iron ore industry, capitalising on the boom is not just about increasing production, but having access to infrastructure - first.

Fortescue Metals has tied itself in legal knots trying to get third-party access to BHP Billiton's port and rail infrastructure in the Pilbara, and in the mid-west of WA two iron ore miners have decided to part ways and find new partners in the quest to get first dibs on badly needed infrastructure.

Infrastructure isn't cheap and the economics can be tough. In the case of the Pilbara, legal stoushes over access are well documented, but what is little known is that a similar story could unfold at Western Australia's original iron ore destination, the mid-west, which has finite infrastructure capacity from project to port, at Geraldton - the only major water gateway for the region.

But Midwest Corporation has been forced to sign an exclusive agreement to get access to infrastructure following a decision by Murchison Metals not to proceed with jointly developing infrastructure in the Geraldton region.

"I was flabbergasted when Murchison told us they were going it alone with Mitsubishi to build the infrastructure," Midwest chief executive Bryan Oliver says.

Instead, Midwest is backing the $2 billion Yilgarn Infrastructure project, which he says will list on the ASX in October.

The project proposes to build a 470km railway and a new port at Oakajee, which is 20km from the old port at Geraldton. If everything goes to plan, and there are many things that could go wrong, Oliver expects the company to become the fourth-biggest iron ore producer in Australia.

Murchison executive chairman Paul Kopejtka sees it differently.

He says the company decided to pull the plug on Midwest and join up with Mitsubishi because it was in the best interests of shareholders. "Over the past 12 months we were working with Midwest and it came to a halt when we went into exclusive discussions with Mitsubishi," he says. "The fact is we are the only company to do the engineering on rail and port infrastructure and he who owns intellectual property on engineering is the most important thing."

Oliver says the main thing is to have a State Agreement in place to build the rail and port. Nothing can be done without one.

Midwest aims to be the fourth-biggest iron ore producer in Australia, with expectations it will produce 30 million tonnes a year of iron ore by 2011.
Murchison has signed with Mitsubishi to develop its own joint infrastructure business, which could cost up to $3billion.

The deal involves Mitsubishi acquiring 50per cent of Murchison's Jack Hill iron ore assets, in return for an upfront $150 million cash, then a more significant payment in a year, a deferred payment, which is half the net present value of the project.

But as one Sydney analyst says: "We suspect the strategic positioning is only just the beginning. Like many divorces this one may be about to get quite messy."

Both say they have the advantage. Murchison's Kopejtka says the Mitsubishi deal gives it access to finance and the company is more advanced in engineering: "We have been working on it since late 2004, before these guys were even kicking around."

But Midwest's Oliver says his company has the State Government Agreement, without which there is no infrastructure project. This points to protracted negotiations between Murchison/Mitsubishi and the state Government, which could delay Murchison gaining a State Agreement.

But Kopejtka disagrees. He reckons Midwest's State Agreement is out of date and even if they had hooked up with Midwest they would have started negotiations with the state Government from scratch.

As one analyst says, the West Australian Government has been put in the difficult position of choosing between Japanese (Mitsubishi) and Chinese interests. It may find the thing to do is to procrastinate.
He says the best solution is for a merger between the two companies.

Murchison has a market capitalisation of $1.8 billion, while Midwest is valued at $635 million.
Meanwhile, Midwest will raise $29 million in a fully underwritten 1-for-7 non-renounceable rights issue next month at $1.46 a share. With the share price at $3.55, existing shareholders will grab it.

The key to a successful company is getting access to infrastructure first. Both parties will have to deal with each other because they cannot build two ports and two rails. Besides being economically unsound, the state Government would not allow it.

But shareholders are buying into anything that remotely mentions the metal. The handful of listed iron ore stocks was boosted this week when incoming BHP Billiton boss Marius Kloppers predicted demand would exceed supply for some time yet.

At the same time, UBS put out a report forecasting that iron ore prices will rise another 25 per cent next year, buoying the earnings of Rio Tinto and BHP Billiton by 22per cent and 10 per cent respectively.

 

[alanding]

Re: FWL - Ferrowest Limited

Mate...the volumes begin traded on this stock are ridiculously low. Sometimes $20k a day. Just a few people getting a little bored and wanting to move their piddly amounts elsewhere

I wouldn't read anything into this. I think this stock is now at a crossroads, with those believing in a positive PFS already onboard, and those who don't are already out

I agree with you. Sometimes the gap between asking price and bid price is 0.05. Aslo with so low volume. So what we need the PFS.

 

[toc_bat]

Re: FWL - Ferrowest Limited

yeh i guess i was tryig to say that, but it didnt really come across, i know ysterdays low of 60c was reached due to one $6ktrade from 64.5 -> 60, its just a handfull of sellers,

 

[toc_bat]

Re: FWL - Ferrowest Limited

well i rang the company and they told me the pfs will definitely be out this month, he wouldnt be more specific as he said he is only willing to repeat to me what has already been told to the market,

 

[Caliente]

Re: FWL - Ferrowest Limited

Hey all - the transient drop in FWL is due to the tight holding structure.

Tiny tiny sell volumes will make this one move, so just hang on strong as the reverse applies as well.

Come PFS (before the end of this month) there is going to be some brutal buying, I put my name on it.

Cheers
-Cali

 

[stefoid]

Re: FWL - Ferrowest Limited

I don't think the process will be a problem at all. Kobe Steel are crying out for ITmk3 to be recognised globally.

The real 'issue' is the grades of the concentrate. However, if you compare Cleveland Cliff's grades (ITmk3 approved) with Ferrowest's samples, you will see great similarities. Therefore, no issue at all...I hope

http://www.cleveland-cliffs.com/Operations/Products/Pages/IronOreAnalysesTable.aspx


(FWL sample pdf attached)

Isnt the planned c.cliffs project the first comercial proper sized implementation of the project? Its a plus that some other company is biting the bullet first so that both CC and kobe can 'iron out' whatever kinks they find for us. but I wouldnt bet my left one that there wont be problems.

 

[Lachlan6]

Re: FWL - Ferrowest Limited

From the sounds of things (FWL) sounds like a great opportunity. Thanks for the fundamental opinions on this one. From a chart perspective I am waiting for a break of the bullish triangle pattern before I enter, probably at around 75c. This pattern is very bullish after a strong rise in price and especially when supported by low volume which is the case. Watching and waiting.

 

[Pommiegranite]

Re: FWL - Ferrowest Limited

Isnt the planned c.cliffs project the first comercial proper sized implementation of the project? Its a plus that some other company is biting the bullet first so that both CC and kobe can 'iron out' whatever kinks they find for us. but I wouldnt bet my left one that there wont be problems.

Maybe...but I'm guessing that most of us would have taken some profits well before Cleaveland Cliffs or Ferrowest begin production

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

Looks like theres some buyers trying to accumulate before PFS is out,

I still expect FWL to hit at least $1 if the PFS stacks up and given thats only 2 weeks away at most as MD has repeatedly stated it will be out before the end of the month,

A few people have asked how they expect the stock to behave once the PFS is out and if the SP has already factored it in etc etc

Well I think that it has to some extent but not fully,
I don't think the PFS will be a buy the rumour sell the fact situation for one reason

The PFS should show EBIT of $75mp.a. for at least 20-30yrs,

So you would Expect the stock to trade close to at least 1 yr of EBIT, say $85m = $1 FWL

Interesting times lay ahead

$200m p.a. US = $250m p.a. AUD (US/AUD 80c)
30 yrs = Gross Cash Flow Total of $7.5Billion

Still I prefer to work with the EBIT of $150/t for 500kt's for 30yrs
= $150 x 500,000 x 30 = $2.25Billion Total EBITDA

Thus I estimate an intial NPV of say $1Billion
The depsoit is most likely to double or tripple in size after speaking to the Chairman, as the intial JORC is from 6-9kms of a total 27-30kms

With Iron Ore unlike others, I think it deserves a higher % of potential NPV due to the fact that Iron Ore/Pig Iron is more stable and is far easier to get funding for, ie Chinese, Japanese, Koreans etc so I'd say 10% of NPV would seem reasonable = $100m = $1.20c FWL




What my broker said was after the PFS if it ALL STACKED UP, IE NPV $1Billion THEN AND ONLY THEN would a 10% of possible NPV seem reasonable/cheap,


I must emphasise I can't believe how well its held up, the really goes to show that holders are not selling and buyers seem to be holding, from what I gather those on ASF who play stocks for a 'quick buck' got out yesterday,

I firmly believe that this stock tick's all the boxes to being a solid development story, if you cast your eyes over the beginings of MMX, GBG, MIS, TFE, AGO or even MGX they all started from humble beginings but in hindsight had the potential to become what they have now,

I will be very surprised if the stock doesn't reach $1 within the next 3 months as I expect the PFS to deliver the goods

 

[alanding]

Re: FWL - Ferrowest Limited

Looks like theres some buyers trying to accumulate before PFS is out,

I still expect FWL to hit at least $1 if the PFS stacks up and given thats only 2 weeks away at most as MD has repeatedly stated it will be out before the end of the month,

A few people have asked how they expect the stock to behave once the PFS is out and if the SP has already factored it in etc etc

Well I think that it has to some extent but not fully,
I don't think the PFS will be a buy the rumour sell the fact situation for one reason

The PFS should show EBIT of $75mp.a. for at least 20-30yrs,

So you would Expect the stock to trade close to at least 1 yr of EBIT, say $85m = $1 FWL

Interesting times lay ahead

From the buyers' depth we can say that. It is totally different from the depth a week ago, which buyers were less and the prices were not successive.
2 25,300 0.655
4 300,800 0.650
1 200,000 0.640
1 13,000 0.635
2 15,900 0.630
2 14,450 0.620
1 6,000 0.615
1 10,000 0.610
3 7,336 0.600
1 17,699 0.565

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

lol Alanding,

I see you decided to enlarge my comment and paint it bright Red, nice ramp lol,

But yes I do agree that the buyers are coming on and depth looks alot stronger now,

Maybe gearing up for a run? Who knows

Its the PFS that I'm waiting for