Ann: Independent Expert's Report, page-10

I have made this comparison before but I will repeat it because it is so brilliant...

You are the country of Albalad and you need apples to feed your country. GBG says they can plant 1000 trees and feed your country for the next 100 years. You said great and co-fund the planting of apple trees with your new partner GBG on their land.

The Apple Market Place
There are lots of places you can buy apples, Brazil, India and even some Aussie producers at 120 bucks a tree. There is no reason to think these independent countries would stop selling apples to the great country of albalad.

Project Apple
After funding the project at a low interest rate (opportunity cost lost on what you could of done with this money) and putting lots of money towards the development of apples you find out that it will cost you 80 bucks a tree to produce. The market is now offering fully developed apples for 50 bucks.

Country of Albalad
You are pretty upset as you believed with your partner that you could produce for cheaper than the open market but are now stuck with the project paying 80 bucks for apples you can buy at 50.

Now do you really think the country of Albalad made out on a deal where they pay above market value (i.e. they are funding the COGS at 80)? However you for some reason continue to fund the project even when you are well and truely losing with every ounce produced.

Perhaps they see in 30 years there will be no apples and secured the rights to apples? Maybe you a turnaround in the apple market 5 or 10 years from now, but based on today your country is in a really bad position.

I know the approval of the covenant makes 0 sense for shareholders, but I am not sure what happens when we say no to the hand that feeds us. They may have made mistakes too, but they have been good partners through the process with funding.

I am thoroughly confused on how to vote my shares as neither option sounds great to me. I was really hoping for more forward looking statements on how we survive the iron ore glut with our partner. We are a shell company, so why not cut our admin to just the board with Keith taking on CEO role and outsource our reporting requirements?