iron ore project, page-7

I posted the following today under the post headed "Suspension of Activities in Liberia" before I noticed this thread, so have copied it here as well.

As a shareholder this whole Liberia deal looks far too costly and I for one would be very happy to see RND walk away from it. They are paying too much, the iron ore price is plummeting and likely to go further, and if the option to purchase IRL is exercised, then 96 million shares will be issued to RCL. Additionally RND will transfer 8 million TBR shares (currently trading at $3.20 each) to RCL. Option considerations already paid total $280,000. There is also additional consideration of 72 million RND shares (+ 36 million 75c options) to be issued to RCL if the inferred Resource is greater than 500 million tonnes, but that is not all - if the inferred resources is greater than 2 billion tonnes then those figures rise to 288 million shares and 144 million options.

On the basis of these figures (someone tell me if I am wrong) there is the potential for RCL to control 89.6% of RND. RCL would also directly control 15.9% of TBR, with RND (now majority owned by RCL) owning a further 10.7% of TBR.

Looking at this from RCL's perspective, they will be gaining majority control of RND (regardless of the size of the inferred Resource), WITHOUT losing control of the Liberian iron ore exploration licence, and in the process picking up 15.9% direct ownership of TBR. TBR also owns 42.7% (i.e. 25.9 million of the current 60.8 million) of the current RNS shares on issue. RCL would also gain control of the RND cashflow which is possibly their main objective.

To my mind this potential deal is a disaster. In essence, company control is being given away, cashflow control is being given away and all for an iron ore exploration licence that will remain controlled by RCL (via RND). It doesn't make sense. If the directors could bring themselves to back out of this Liberian deal, I expect the RND share price would sky rocket - this potential deal is massively depressing the current RND share price. At the moment cash is being siphoned off to a' white elephant' deal (IMHO) to the detriment of current shareholders. It is a project that could take 10 years to bear any fruit and the benefits of which will NOT flow to current RND shareholders, but rather to RCL. As I have already said - it doesn't make sense.

Let me know if any of the numbers and calculations/assumptions above are incorrect.

DYOR carefully.