Jun 30, 2022

Sentiment: Bullish

Type of Trade: Speculative

Industry: Iron Ore

Sector: Materials

Hawsons Iron Ltd is a mineral exploration company that engages in the production of iron ore in Queensland, New South Wales, and South Australia. Its flagship project is on the Hawsons Iron Project (HIP).

The company has shifted from a simple explorer to developer of high grade OR supergrade iron ore, and could become a producer within the next 24 months.

The prefeasibility study has shown that Hawsons is capable of producing the world’s highest-grade iron product (70%Fe), making it the the world’s leading undeveloped high-quality iron ore concentrate and pellet feed project.

The company claims to have One of the World’s best high-grade iron ore development projects.

See other comparative with Large Scale and high grade iron ore developments projects in Australia.

✅ Hawsons project is located just 60 kilometres south-west of the Silver-City, providing access to well established rail, road, port and power infrastructure in a region with a long mining history and high skilled labour force access.

✅ Competitive costs within the first quartile of the global iron ore cost curve.

✅ Since the Iron ore prices is currently well over USD$100/t the project would return far higher NPV.

✅ Bankable Feasibility Study (BFS) to focus solely on development of the 20 Mta project due to expect superior economics, ESG outcomes and investment appeal relative to a 10Mtpa project. Decision was based on the strength of preliminary investigations undertaken after the Mineral Resources upgrade to 400Mt announced 19 October 2021.

✅ MOU signed with Flinders Ports to cooperate on the development and operation of a Myponie Point Port for the export of 20 Mtpa of magnetite concentrate. The port is expected to be ready to start exporting Hawson’s unique 70% Fe Supergrade magnetite concentrate by the second half of 2024.

✅ Land Option Agreement was signed to purchase land suitable for developing export facility at Myponie Point, thurs giving the right to purchase three blocks of land at any time within two years of execution date. With the MOU and Land Option Agreement on hands, the company has the opportunity to participate in the future growth of the Myponie Point Port as the “cornerstone” customer.

First Production is targeted for H2 2024.

✅ Company is well funded to move forwards with the project.

`✅ 100% Owned project by the Company. 24 March 2022, HIO announced 100% control of Hawsons Iron Project via the buyout of Starlight Investment Company’s 6.037 per cent share

Premium Prices for Hawsons Supergrade 70% Fe Product compared to other producers such as Forescue that sells iron ore grades between 56 and 59%, Rio at 58-69% and BHP just above 60%, therefore giving Hawsons advantage. Operating margins expected to sit within the first quartile per Wood Mackenzie estimates due to a price premium for Hawsons Supergrade® 70% Fe iron ore product and favourable ore body characteristics (uniquely contained within soft siltstone) resulting in lower energy costs.

Comparison of CFR North China Spot Iron Ore Prices (US$/tonne)

Furthermore, Ore body uniquely contained within soft siltstone enables the company to save considerable amount of energy and water during the processing in comparison to Magnetite Ores, in this case up to 75% less comminution power consumption used to process Hawson iron ore than hard-rock magnetites mines as confirmed during BFS works.

ESG framework in place, targeting Net Zero Mining Operations. In a World that decarbonisation is key value for an emerging number of Businesses due Government requirement, Hawsons Iron Ore could be play a key role in the new phase, if the company is able to deliver its output in the market.

High grade magnetite iron ore products are critical for DRI-EAF (DRI/EAF route is a proven production process that is currently applied using natural gas as a reductant, for example by players in the Middle East with access to a cheap natural gas supply).

✅ Favorable macro economics for steel, since it is a critical material for the transition to a low-carbon economy and it is present in large importance in almost every single product.

🚩 As mentioned in the last market update, the company has faced some delays due COVID and the Wet-Weather. Further delays could push the first production to 2025 and it is important for investors to be mindful that delays could affect SP (stock price) negatively.

Company Timeframe

Stock Price Performance in the last 24 months

If you have bought the stock 52 weeks ago, you would be taking ~ 170% capital gain, nevertheless at some stage the stock would have given over 400% when it has reached its ATH (all times high) of $1 where SP (stock price) was clearly trading within the FOMO area.

Since SP hit its ATH there was 53% correction, thereby bringing the stock back to a relative attractive area or at technically fair price.

Entry Details

✅ Bullish Intersection level 2 confirmed.

✅ Strong volume to the upside was building until today.

🚩Red Candle on the Heiken Ashi today suggest the stock could fall back to 40c level. Bullish intersection level 1 incompleted.

🚩 Bullish intersection incompleted. Investors that are holding need to seek for a bullish intersection level 1 confirmation.

Entry at 50c will give investors or traders a potential 20% downside during the last higher low for 20% upside at 62c. We suggest an entry around 45c or lower to decrease the downside in this bear market.

Target BGS 20 Strategy at 62c | 25% Profit

Stop loss: at 39c

Risk: Very High – Speculative Stock in a bear market and depends on iron ore price.

Weight on Portfolio: 3%



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