ICU - Investor Centre

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

Thought I might do a comparison of FWL against 3 others, AXO, IDO and GRR


FWL
Share Structure 55m shares + 30m 25c 1/6/2010 Options
Mkt Cap @35c = $19.25m undiluted or $29.75m fully diluted

Project
NPV = $1 Billion based on EBIT of $75m p.a. for 30yrs

CAP EX = $330m including a 20% blow out

Infrastructure = Excellent on the main highway to the main Gerladton Port, major gas pipeline runs through the deposit, town of Yalgoo only 14kms down the major highway

Ore = Good although low grade, its coarse and testing has shown "This sample produced a very good iron recovery coupled with a low silica return at a coarse (and therefore cost effective) grind size"


AXO
Share Structure 72m shares + 11m 20c 20/10/2007 + 16m in the money unlisted opies

Mkt Cap @90c = $65m undiluted or $90m fully diluted

Project
NPV = $500m Ferro Vanadium production

CAP EX = $500m

Infrastructure = Avg requires alot of Infra

Ore = Good for Vanadium production, but unsure how easy it will be to produce Ferro Vandium



IDO
Share Structure 80m shares

Mkt Cap @$1.25c = $100m fully diluted

Project 70% Only!!
NPV = $800m Pig Iron like FWL!

CAP EX = $750m

Infrastructure = Poor Its in Indonesia, and given huge Cap Ex I'd say Poor!

Ore = Poor Its an Iron SANDS deposit grading 10% Fe so will be difficult IMO to beneficate etc



GRR
Share Structure 110m shares

Mkt Cap @$2.10 = $240m fully diluted

Project70% Only!!
NPV = Could be huge $2Billion ? Iron Pelletss

CAP EX = $1.5Billion

Infrastructure = Poor needs to build power plant, then build power lines, needs to build a slurry pipe line that goes 100kms, needs to dredge the port to make it deep water etc, clearly alot of work here, but rewards could be exceptional

Ore = Excellent for Iron Pellet production, the high grade ore keeps operating costs down




So the point I'm trying to make, is aguably GRR is the most advanced and most likely to get into production the soonest, IDO seems risky and requires a large CAP EX, AXO seems cheap when compared to PMA and GRR but I don't know what the operationl risk is with beneficating Ferro Vanadium


Bottom line at $20m FWL is wayyy to cheap! even $30m fully diluted is too cheap, this peer comparison would suggest $50m to begin with and then eventually up to $100m as the project risk reduced

 

[R0n1n]

Re: FWL - Ferrowest Limited

spotted this on the ASX. Looks like the ASX guys are watching FWL very carefully..
which is good. This one is worth watching carefully, like others have said...

 

[Fool]

Re: FWL - Ferrowest Limited

spotted this on the ASX. Looks like the ASX guys are watching FWL very carefully..
which is good. This one is worth watching carefully, like others have said...

While I agree with FWL is worth watching closely... the ASX send those letters for every stock that hasn't had a price sensitive announcement as fluctuated a significant amount.

In other words, that ann is nothing special

 

[Caliente]

Re: FWL - Ferrowest Limited

I've been watching FWL pretty carefully as well since it was about 26/26.5 . wondering whether to go the heads or op route and then it exploded

IMO the options are a bit wild on the premium side despite their long life, so gone with the heads at 30 even for now.

 

[Fool]

Re: FWL - Ferrowest Limited

I've been watching FWL pretty carefully as well since it was about 26/26.5 . wondering whether to go the heads or op route and then it exploded

IMO the options are a bit wild on the premium side despite their long life, so gone with the heads at 30 even for now.

I like options because you generally can get a dickload more of them then you can the heads (for the same money).

Specially if the heads are trading well below the exercise price.

Hard call if the expiry is close, but this one is not til November, plenty of time for the head to go somewhere.

 

[Caliente]

Re: FWL - Ferrowest Limited

I agree fool! But the option offer was 18 cents opposed to 30 on the head.

Thats 67% leverage in exchange for a 43% premium (18+25).

I like the heads for now, if the equation changes, I'll swap over to the options. I feel the recent rise to 40 was a hotcopper false-start/.

With the JORC due in a few weeks this one should be massive.

A growth hold story in iron ore for me.

My hold from the big players basket would be MMX/.

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

Hi guys, just attaching an image of Ferrowest's Yalgoo/Yogi project's location and infrastructure,

Note the following:
1. The fact that the main Geraldton - Mount Magnet Highway runs straight through FWL's Yogi project straight to the Port of Geraldton. So we can just Truck the Ore!

2. The main Mid West Gas pipe line also running straight through the project, easy energy source!

3. The close proximity to the town of Yalgoo = Lots of exisiting infrastructure, airstrip, hospital, fire, ambulance etc etc as well as a large mining work force!


I hope the image works,

 

[Sprinter79]

Re: FWL - Ferrowest Limited

Last time I was up that way, i dislocated my knee.... The drive back to Perth was not pleasant at all hahaha


So many memories :

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

Guys, I went to a bit of effort to do this comparison (15mins) I'd appreaciate some feedback or thoughts, look at the comparisons, is my assumption of a starting mkt cap of $50m reasonable? If not why? Can anyone find an Iron Ore producer play with a possible NPV of $1Billion and a Mkt Cap of $20m (undiluted) ? ? ?

Thought I might do a comparison of FWL against 3 others, AXO, IDO and GRR


FWL
Share Structure 55m shares + 30m 25c 1/6/2010 Options
Mkt Cap @35c = $19.25m undiluted or $29.75m fully diluted

Project
NPV = $1 Billion based on EBIT of $75m p.a. for 30yrs

CAP EX = $330m including a 20% blow out

Infrastructure = Excellent on the main highway to the main Gerladton Port, major gas pipeline runs through the deposit, town of Yalgoo only 14kms down the major highway

Ore = Good although low grade, its coarse and testing has shown "This sample produced a very good iron recovery coupled with a low silica return at a coarse (and therefore cost effective) grind size"


AXO
Share Structure 72m shares + 11m 20c 20/10/2007 + 16m in the money unlisted opies

Mkt Cap @90c = $65m undiluted or $90m fully diluted

Project
NPV = $500m Ferro Vanadium production

CAP EX = $500m

Infrastructure = Avg requires alot of Infra

Ore = Good for Vanadium production, but unsure how easy it will be to produce Ferro Vandium



IDO
Share Structure 80m shares

Mkt Cap @$1.25c = $100m fully diluted

Project 70% Only!!
NPV = $800m Pig Iron like FWL!

CAP EX = $750m

Infrastructure = Poor Its in Indonesia, and given huge Cap Ex I'd say Poor!

Ore = Poor Its an Iron SANDS deposit grading 10% Fe so will be difficult IMO to beneficate etc



GRR
Share Structure 110m shares

Mkt Cap @$2.10 = $240m fully diluted

Project70% Only!!
NPV = Could be huge $2Billion ? Iron Pelletss

CAP EX = $1.5Billion

Infrastructure = Poor needs to build power plant, then build power lines, needs to build a slurry pipe line that goes 100kms, needs to dredge the port to make it deep water etc, clearly alot of work here, but rewards could be exceptional

Ore = Excellent for Iron Pellet production, the high grade ore keeps operating costs down




So the point I'm trying to make, is aguably GRR is the most advanced and most likely to get into production the soonest, IDO seems risky and requires a large CAP EX, AXO seems cheap when compared to PMA and GRR but I don't know what the operationl risk is with beneficating Ferro Vanadium


Bottom line at $20m FWL is wayyy to cheap! even $30m fully diluted is too cheap, this peer comparison would suggest $50m to begin with and then eventually up to $100m as the project risk reduced

 

[vert]

Re: FWL - Ferrowest Limited

hi yt, looks like another great prospect your on to here, one issue that they will have to deal with is carting the ore. they wont be able to just truck the ore in to gero. alanah mctiernin is currently getting other mid-west iron ore plays of the roads and on to rail. they maybe alowded to truck to mullewa then rail to gero.
will do some more research tomorrow on the other plays locations and where proposed rail lines might be going, bit of luck and a rail line might go straight past them.

 

[Caliente]

Re: FWL - Ferrowest Limited

with regards to trucking the ore, many iron ore companies are doing/planning to do it already, so it is very feasible. We're looking at a 2.5/3 hour haulage, not bad at all.

The company is also interested in haulage to Mullewa + rail ala Mount Gibson. (MGX) is using the Mullewa-Geraldton line right now.

As far as I am aware they don't have exclusive rights to it either, so they're not going to be sh*t-kicking around like BHP.

The real kicker is this...

The ITmk3 Process could provide mining companies with an attractive alternative for mineral processing in supplying a value-added product in the form of iron nuggets. Consisting of 96% to 98% iron and 2% to 4% carbon, the iron nuggets are 50% lighter and 90% more compact than iron ore, thus reducing shipping costs.

Note this was written in like 2003, itmk3 works - with plants achieving continuous production to the tune of multiple tonnes of virtually identical to blast furnace quality iron nuggets (except in 10 minutes vs 8 hours).

So its not sci-fi to all the technology naysayers. Additionally, if mk3 somehow fell through, the company would just resort to 2nd generation processing.

 

[nomore4s]

Re: FWL - Ferrowest Limited

hi yt, looks like another great prospect your on to here, one issue that they will have to deal with is carting the ore. they wont be able to just truck the ore in to gero. alanah mctiernin is currently getting other mid-west iron ore plays of the roads and on to rail. they maybe alowded to truck to mullewa then rail to gero.
will do some more research tomorrow on the other plays locations and where proposed rail lines might be going, bit of luck and a rail line might go straight past them.

Vert, this is off the website and may also be an option if trucking it will be a problem.

Transportation studies will also give consideration (particularly in regard to future increased production) to:
Trucking merchant pig iron to Mullewa and then transferring to rail for delivery into the Port of Geraldton; and
Restoring the narrow gauge rail line from Mullewa to the Project site along a pre-existing rail easement, a distance of 134km.

The management seem to be very thorough and have made sure they have plenty of options for various stages of the project. It will be interesting to see how it progresses.

 

[vert]

Re: FWL - Ferrowest Limited

thanks nomore4s, they have got it sussed by the sounds of it. start trucking while the old line gets upgraded then change over to rail, pretty easy compared to others in the region i think.

 

[Sean K]

Re: FWL - Ferrowest Limited

Guys, I went to a bit of effort to do this comparison (15mins) I'd appreaciate some feedback or thoughts, look at the comparisons, is my assumption of a starting mkt cap of $50m reasonable? If not why? Can anyone find an Iron Ore producer play with a possible NPV of $1Billion and a Mkt Cap of $20m (undiluted) ? ? ?

Can't find any others YT.

IDO is the closest I think, but they are different companies at different stages of development.

Market cap just over $100m now.
Already JORC to 65mt fe equiv. (what's FWL fe equiv? No JORC yet - we're assuming it's going to be XX tns, but by what you have discussed with the company we can assume your guestimate might be close)
This is just 10% iron sands (FWL 25%?)
NPV $505m (FWL $1b - Maybe), $30m per year cash flow from early sales. (less than FWL)
Infrastructure is actually pretty good where it's located although you are right Indonesia can be dodgy, but labour is cheap as chips (literally).
Capex $700m. (FWL $300m might be hard to achieve?)
Production within 3 years. (FWL is possibly when? 3-5 yrs?)
This is similar sands to being mined by BLuescope in NZ so the technology is there for processing. Doesn't have to rely on the tech that FWL are 'trialling'.
Earning just 70%.
Already has offtake agreement. (who are FWL talking to?)
Has other projects in Peru and NT - not sure of what these are worth to them. Possibly nothing?

So, looking at that you would think FWL is probably cheap in comparison. Or, IDO is overpriced??

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

If IDO is overpriced, then so is AXO and GRR as they still have substantial hurdles in front of them! Rather the whole Iron Ore mkt is then overpriced, since FWL is the cheap anomoly, this leads me to believe that FWL will be re-rated post the JORC (1 week to go) and then again PFS (2-3 weeks to go) I'd keep saying ti and I stand by it, I expect a mkt cap of $50m+ once the mkt has confirmation from the company that they stand to make $80m a yr for 30yrs!

As for offtake, like I said, Japan's Kobe Steel has already asked for samples, see the ann, its to test if the ITmk3 Process will work as Yalgoo and then no doubt Kobe would want the offtake so no lack of interest, also per the article and my discussions with MD, the Chinese have been nipping at their heels since day 1, so they should have no problem in signing up a JV/offtake partner

Can't find any others YT.

IDO is the closest I think, but they are different companies at different stages of development.

Market cap just over $100m now.
Already JORC to 65mt fe equiv. (what's FWL fe equiv? No JORC yet - we're assuming it's going to be XX tns, but by what you have discussed with the company we can assume your guestimate might be close)
This is just 10% iron sands (FWL 25%?)
NPV $505m (FWL $1b - Maybe), $30m per year cash flow from early sales. (less than FWL)
Infrastructure is actually pretty good where it's located although you are right Indonesia can be dodgy, but labour is cheap as chips (literally).
Capex $700m. (FWL $300m might be hard to achieve?)
Production within 3 years. (FWL is possibly when? 3-5 yrs?)
This is similar sands to being mined by BLuescope in NZ so the technology is there for processing. Doesn't have to rely on the tech that FWL are 'trialling'.
Earning just 70%.
Already has offtake agreement. (who are FWL talking to?)
Has other projects in Peru and NT - not sure of what these are worth to them. Possibly nothing?

So, looking at that you would think FWL is probably cheap in comparison. Or, IDO is overpriced??

 

[Bungay]

Re: FWL - Ferrowest Limited

YT - you've got talent sniffing this one out, after cashing in on MGO - i find your summary treatment of AXO a bit harsh tho' - it's way in front with a BFS, proxim to infrastructure, MoU with Chengde, potential partner checking out etc.. good luck with the exams

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

YT - you've got talent sniffing this one out, after cashing in on MGO - i find your summary treatment of AXO a bit harsh tho' - it's way in front with a BFS, proxim to infrastructure, MoU with Chengde, potential partner checking out etc.. good luck with the exams

Am happy to be corrected, but from what I found, I thought AXO needed to build a fair bit of infrastrucutre to get Balla Balla off the ground?

That being said AXO is an extremly undervalued company when compared to PMA, likewise IDO is undervalued when compared to the rest of its peers,

The point of this comparison was not to 'put down' or criticise the other parties, but was to show how undervalued FWL comparatively is currently.

Likewise FWL still has a long way to go, but they appear to be moving quickly now and the PFS which is due out in the next 3 weeks will be a company changer which should cause a re-rating.

Thanks for the feedback so far guys, appreaciate it,

Has anyone else called management with queries?

 

[YOUNG_TRADER]

Re: FWL - Ferrowest Limited

I should add from a technical point of view and judging by the buy depth it looks like 30c/33c is a support level, I would like to see FWL forming a nice base here at 33c pre the JORC and the PFS,

Kennas a chart woul be nice, what do the technicals say re price targets, support resistance etc, I know its a thinly traded stock and doesn't have that much of a history but I see that the 30c/33c level has only been flirted with twice before and both times its has failed to hold

Where as the pst 3 days have had avg trading around 35c which is really positive IMO,

Thanks in advance special K!

 

[Pommiegranite]

Re: FWL - Ferrowest Limited

Interesting article in last weekend's West Australian' on the future of Iron Ore (for those who missed it like myself). I guess it can be applied to pig iron:

Iron ore boom to roll on


12th June 2007, 7:15 WST


The good times for Australian iron ore miners are set to keep rolling at least until the end of the decade, as Chinese demand shows no sign of slowing.

According to the latest research by US investment bank Citigroup, iron ore prices are expected to rise at least 20 per cent over the next two years and could rise that amount next year alone.

“Tight market conditions are expected to prevail over the next two years, pointing to a 20 per cent increases in prices, however, there are a number of additional considerations lending further price support in the shorter term,” Citigroup said.

“We have taken the view therefore that producers will front-load the price increase (and) now expect prices to increase 20 per cent in 2008-09 and to be flat the year after.”

Citigroup’s revised forecast follows upgrades by fellow banks UBS and Goldman Sachs pointing to cumulative rises of 10 to15 per cent over the next two years.

Should Citigroup’s predictions prove correct and a sixth consecutive increase is agreed in price talks for next year, prices will have risen more than threefold since they last fell in 2002.

Premium Pilbara lump ore was then fetching around $US23 a tonne, while another 20 per cent increase next year would boost the price to around $US80/tonne.

At the same time, official figures from China have shown that Beijing’s efforts to slow its rampant economy and ease domestic inflation are having minimal effect.

Iron ore imports jumped sharply to just over 100 million tonnes in the March quarter, keeping the full year total on track to rise 20 per cent to a record 400 million tonnes this year.

“I can definitely say it (the price) is going up,” Fortescue Metals Group chief Andrew Forrest said on Friday.

“There is an unstoppable force about the demand from the steel industry and the failure of infrastructure to supply it.”

That imbalance has already sparked a desperate Chinese response to gain greater sway over future negotiations and supplies.

With Beijing’s approval, individual Chinese steel companies have been aggressively investing in new mines around the world for several years.

Last week, four of China’s biggest steelmakers ”” AnSteel, Baosteel, Shougang Steel and Wuhan Iron & Steel ”” formally launched a dedicated joint investment vehicle to acquire foreign resources.

The company, Beijing Steel Industry United Mining Resources, would improve Chinese steelmakers’ control over supply, AnSteel said.

AnSteel, which is already a partner in Gindalbie Metals’ planned $1 billion Karara magnetite project east of Geraldton, said control of iron ore supplies had “for too long been in other people’s hands”, in turn creating “market instability”.

“Steelmakers who don’t have their own iron ore resources will not survive,” Wuhan said in a statement.

The new company’s initial venture will be at Preah Vihear in Cambodia.

Aside from Karara, Chinese companies are already backing new WA mines in the Pilbara at Cape Preston, Balmoral and Cape Lambert, and in the Mid-West at Koolanooka, Weld Range and Extension Hill.

JOHN PHACEAS

 

[aaronphetamine]

Re: FWL - Ferrowest Limited

Looks like an Harami Cross Candlestick formation on the last day days of trading for FWL, even though they are both black candles, an Harami Cross is usually good news for the SP of a stock.

So with good market sentiment the SP of FWL looks like it will gain tomorrow, also there is quite a thin sell side and a large buyer side.