CP's main argument is in 2008 small amount of iron ore has been mined and he is entitle to his royalty. But those small quantity is probably only for testing samples, because in 2008 CITIC Sino got nothing been build just an empty block of land. My view is:
1) Why claiming for 2008 small testing sample royalties in 2012 (4 yrs later)?
In 2008-09 CP needs Chinese to float Resoursehouse and may be make a t/o offer to ARH. Now he realised ARH is a dead project. Nobody will ever invest in ARH's project. CP always say "it is a matter of principle". This principle (ie in CITIC's contract royalty starts when ore been moved from the ground") is ore been moved from the ground including testing samples. Now ARH is dead, this principle applies. If CP thinks Chinese will invest in ARH, this principles does NOT apply. Clearly ARH has no potential partner left in talk at this stage or EVER.
CP just picking on CITIC on small details which CP previous ignored for 4 years.
2) ARH's project needs to share infrastrutures with CITIC. CP's relationship with CITIC now could end up in the High Court as CITIC $8B CAPEX is at stake. By fighting with CITIC on probably a few million dollars of royalties (may be $50m royalties, but small money for him), ARH is essentially dead.
Will CITIC share infrastructures with ARH knowing CP is the biggest share holder? NO! Unless ARH pays MASSIVE fees to CITIC and this will make ARH's project uneconomical.
Will anyone want to spend billions on ARH's project knowing what happened to CITIC (and know the court case)? No! IMHO
CP has 250 BILLION tons of iron ore and he is arguing testing samples' royalties. Greedy beyond stupidity. Stupid, stupid, stupid, stupid man.
CP needs CITIC more than CITIC needs CP. Because CP's ores are extremely expensive to mine and uneconomical (ie CP won't mine himself). Who will spend that money? Nobody. CITIC has everything setup, if CP has been nice to CITIC than CITIC might consider t/o ARH and/or continue buying up more of CP's 250 Billion tons.
If I'm CP I will be extra nice to CITIC. Why? 1) CITIC is paying massive royalties 2) Talk to CITIC on t/o ARH for eg MASSIVE $300m (about $0.70/share), but waive the royalties on that 1B ton (only ARH's project). CITIC has trouble with royalties, no so much on purchasing 1B ore cost. This will make CITIC slightly happier and ARH holders (including CP) very happy.
Look you can collect massive royalty on 0 mtpa = $0.00 (currently ARH's situation) (o mtpa X 10% royalty = $0.00).
CP needs some maths classes.
3) Then CP has the opportunity to talk about CP's QLD coal.
Just IMHO.
Read my old (2008-12) posts on ARH. I did warn holders about ARH's project & CP's character.
Questions: 1) Where are CP's royal supporters now??? Bankrupted??? 2) Why updated feasibility study used $275/t iron ore price? 3) Why auditor signed off ARH's book stating ARH's asset worth $325m? Can ARH sell this project for $325m? No! 4) Is CIA, FBI, UFO, Area 54, ghosts, Russians, kangaroos causing ARH can't find JV partner? Or CP himself?
Just IMHO
ARH Price at posting:
6.7¢ Sentiment: ST Sell Disclosure: Not Held
