Ann: Scheme of Arrangement and Demerger, page-72

First 72 Last

Share
Profile

Follow
kevscranes

1,874 Posts.

154

14/03/19

18:20

Post #: 37765679
Share

Originally posted by kmcconkey ↑

The day GBG became a minority partner in KML was the day this offer was in the making.

Simplest thing that could happen is that Ansteel should have just bought GBG out of KML. Even returning the $50m interest free loan and walking away is significantly better than this. There is zero oversight in the operation and fair play of the product coming from KML.

I have worked with so many companies with complex buying arrangements. For instance, I did a job with Quantum, a division of Transpacific that would actually use sucker trucks from a direct competitor because they would cost half the price of going internal (full fair, no retail discounts or negotiation). When you look at the realised price for our very high grade ore something has always seemed odd and it has always been that it didn't really generate a significant premium (which is the whole bloody point). The sole customer controlling the mine is never smart if you're a minority partner. It should have been set up as offtake agreements, Ansteel got 50% of the ore, GBG got 50% of the ore and both parties had to 'reimburse' the entity at cost and an ability to market product direct from port.

The biggest problem was not necessarily the cost of the processing facility and mine (that's a problem for sure) but the significant delay in volume production meant that significantly more debt was loaded onto KML. Add to that the over development of infrastructure may have seemed smart at the time but it was dumb. Reduce the scope and scale of the project and reduce debt, future infrastructure (if ever required) would have been paid for out of cashflow, not debt.

I personally think this is a rotten offer, when you've lost 90%+ already losing the remaining 10% is neither here nor there, but a high grade IO mine that is currently cashflow positive, heading into a world in which climate change becomes more and more significant should mean that this ore will command an ever greater premium. At 2.6c, there is no upside. Returning the $50m loan would see GBG having $80m in the bank, and an inferred 5c share price.

Conclusion- There is only upside for Ansteel in this deal, it simply crystallises a significant loss for almost all GBG retail shareholders and ensures there is no opportunity to get any benefit.

Expand

I no longer hold but if I did I wouldn't be letting Ansteel rod or rob me .
How much of this country and resources do our pollies give away in the guise of foreign investment . Sickening and the board recommend you agree to it .

GBG Price at posting: 2.7¢ Sentiment: None Disclosure: Not Held
6 Upvote

0 Great analysis

Reply

Top Stories

GRL

To make modern missiles, you need 3D Printing. And in that gold rush, Amaero is selling shovels

CMB

Asian Battery Metals uncover second massive sulphide discovery at Mongolia's Oval play

ASX Market Open: Aussie market to leap on best 'Trump trade' bump since election day | November 22, 2024

PCL

HotCopper users react as Pancontinental Energy's trading halt lift reveals little

BTH

Bigtincan's Board backs Investcorp offer: Why a NASDAQ listing could be game-changing

MIN

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

WC8

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

C1X

iTech inks deal with Chilean lithium giant to progress Reynolds Range

ALY

Alcidion inks deal with Vic health provider Peninsula for use of Miya Precision tech

CAF

IP anomaly thrills Cannidah with project extension hopes in QLD

There are more pages in this discussion • 53 more messages in this thread...

First 72 Last

Add GBG (ASX) to my watchlist

Ann: Scheme of Arrangement and Demerger, page-72

Top Stories

To make modern missiles, you need 3D Printing. And in that gold rush, Amaero is selling shovels

Asian Battery Metals uncover second massive sulphide discovery at Mongolia's Oval play

ASX Market Open: Aussie market to leap on best 'Trump trade' bump since election day | November 22, 2024

HotCopper users react as Pancontinental Energy's trading halt lift reveals little

Bigtincan's Board backs Investcorp offer: Why a NASDAQ listing could be game-changing

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

iTech inks deal with Chilean lithium giant to progress Reynolds Range

Alcidion inks deal with Vic health provider Peninsula for use of Miya Precision tech

IP anomaly thrills Cannidah with project extension hopes in QLD

Featured News