from Shares magazine (Australia) - April 2005 (which usually comes out about half a month before the labelled month - in this case; mid-March) - all figures relate to AZR aussie share price......

extract from "Solid Sands" story by Tim Treadgold;

Hard as (high-grade) nails

Apart from uranium, it is hard to find a mineral that fits the description of flavour-of-the-month better than iron ore. So strong is the demand, and so hard are the company spruikers working, that it has even prompted humorous comments from resource industry leaders such as BHP Billiton boss Chip Goodyear, saying that you only had to chuck a bag of rusty nails over your fence and within a week your neighbour would declare his backyard an iron ore mine.

Goodyear's joke aside, the reality of iron ore today is that it falls into the hot, hot, hot category, thanks to surging Chinese demand, which delivered a 71.5% price rise for ore delivered after April 1. For market leaders like BHP Billiton and Rio Tinto that means their profit margin on iron ore has risen sharply, and for small companies wanting to enter the market there could never be a better time.

This is terrific news for big name players like Andrew Forrest and his Fortescue Metals Group, and it is equally good news for smaller fry like Mt Gibson, Midwest and the stock that has done its best at avoiding publicity, Aztec Resources.

Unlike some of its bigger rivals, the sales spiel of Aztec is simplicity itself. It knows it has an iron ore mine because it is essentially reworking an old BHP Billiton mine on Koolan Island in the far north of Western Australia, in much the same way that Portman is re-working another ex-BHP Billiton mine in the south of WA at Koolyanobbing.

The big difference is that Aztec is yet to restart production, but that is shaping as a formality because demand for its high-grade ore is so strong that it has pre-sold its start-up target of two million tonnes a year for the next 15 years. The game now, backed by a vigorous exploration program, is to expand the annual export target to three million tonnes.

Assuming Aztec gets about $78 a tonne for its ore, a price similar to that won in the recent price settlement negotiated by Rio Tinto, that means annual sales at two million tonnes will be valued at $156 million. On a 10% profit margin, that infers an annual profit of $15.6 million, which, at a 12-times earnings multiples, values Aztec at $187 million.

That number crunching exercise is largely for illustration only, because no one yet knows the exact iron ore sales price, or Aztec's profit margin. What is almost certain, however, is that the 10% profit assumption is miles off the mark because the big boys of iron are working at closer to a 50% profit margin, so great has been the increase in iron ore prices.

Potential investors can amuse themselves by factoring in alternative profit margins, and varying tonnages, but whichever way they go, they soon discover that Aztec looks to be seriously cheap at its latest price of about 24, which values the stock at $117 million.

refers to the aussie market, but is also listed on AIM

from www.sanford.com.au - News list; "Around the traps with the Ferret"

One of Ferret's reliable sources pointed out that almost 55
million shares in AZTEC (AZR) changed hands yesterday.
After Portman being snaffled recently it could be on an
acquirers radar.
An attraction is that it's in the final stages of a feasibility
study (due to be finished this month) that should see it scheduling a
start of production of high grade iron ore from Koolan Island (offshore
WA, not far from Portman's Cockatoo Island mine).
Aztec couldn't throw any light on the identity of the buyers or
sellers yesterday.

(Comments and complaints to ferret@rweabn.com.au - no requests
for advice please.)
ENDS
Copyright 2005 RWE Australian Business News. All rights reserved.