Called management today Called management this evening and had a good chat with them. I will try to cover the subjects we discussed (in random order).
1) The re-scope is actually not at step backwards as I suggested - in fact it's more the opposite.
It's a step to make the project more attractive to (new?) potential strategic partners.
FEO is well aware of 3 main issues with the whole project, so they will try addressing these concerns in a pro-active manner by making the re-scoped PEA.
1A) The 3.8B capax. Though iron ore prices has improved it's still a big burden to cough up that much cash, so they will try to lower the capax significantly with the new PEA.
1B) Iron ore prices. They have improved but nobody can tell what prices will be further down the line.
1C) Year round shipping. Though there is already year round shipping from more northern located mines. By cutting the risk of ice breaking shipping, it will of course also cut the costs of shipping in general. This can be done by going from an output of 10m to 5m.
2) So when will the re-scoped PEA be released?
The news release stated first half of next year but it's more likely to be around March (Me: fingers crossed)
3) Asked if there has been other interested parties?
This he could obviously not answer but with the news PEA in hand the project will be more attractive to new potential partners.
4) I asked if the new re-scoped PEA was requested by Power China/Sinosteel?
NO, it's on their own initiative. PC/Sinosteel are doing their own thing so instead of just sitting back and wait for an outcome (good or bad) they want to be pro-active.
5) Do PC/Sinosteel still have a MOU with FEO?
Yes, but again they are doing their thing independently.
6) Who will participate in the financing? Will it be existing shareholders (insiders)?
He wouldn't say but expects a news release clarifying the participants within the next couple of weeks.
7) Do they worry about the share price?
No, not really. They know they have a world class project and are in no hurry of just giving it away so the share price is kind of irrelevant at the moment. (happy to hear this).
8) Asked how the US/China trade war would affect FEO?
He didn't think it would affect them negatively. FEO's iron ore are premium and US' isn't.
Currently most high quality iron ore is coming from Australia and Brazil but in general quality is declining worldwide. The demand for premium iron ore will still be there mainly from East.
My conclusion...
I was happy to hear they are actively doing something to improve the projects economics and make the capax more manageable for potential partner. Also pleased to hear they are by no mean panicking or concerned with the share price.
I can only encourage investors to call management.