Isn't GBG profitable now?, page-15

'It simply took too long to bring to market, cost far too much to build the processing facilities, costs far too much to operate the plant and they completely cocked up the resource evaluation (it was a lot harder than expected) and therefore the plant wasn't even bloody capable of processing it'

None of that is talking about a IO price collapse and all of the things I have stated can be directly blamed on management. However, with regards to your point Samson, the board can and should be blamed for not foreseeing a fall in the price of IO. With the exception of the Citic project KML must be the most expensive producing IO mine in Australia. However, maybe you can say the same about RIO and Alcan or BHP and Billiton or BHP and it's shale assets, none of the boards are to blame for buying or expanding mining interests into huge oversupply markets which then suffer price falls??? What about the boards that sanctioned 7 vast LNG projects in Australia and the market is now facing a glut of supply and huge price falls?

Of course the board could be blamed for not foreseeing a price fall, the price of IO had gone to unheard of levels and vast vast new supply of IO was being brought onto the market. As I stated though, I think the other issues were more critical. The infrastructure cost too much, took too long to bring online and a massive error was made in the resource evaluation, meaning huge production losses and refitting costs. They needed to get this thing online at nameplate whilst the price was still reasonable. It is currently just adding to the debt pile with every single ton it digs out of the ground.

Quick question Samson, would you rather a mine producing IO only be able to produce cash when IO is highly priced (significantly above long term average) or at all times, including lows? If, and that's if, IO gets back to $80/WMT then KML may start to receive some positive cashflow but my feeling is it more likely that it needs around the $85-90/WMT before it starts make some cash. At the $85-90/WMT you will see all the marginal production shuttered since the price falls coming back online. You also need some significant demand side stimulus to maintain that consumption. Then you have to consider Roy Hill and Vale with S11D and BHP and RIO and FMG and all the other companies that can turn on production at $20/WMT.

Unfortunately I think the end is not far away for this one. A company of revenue of $500 million cannot sustain operational losses of $200 million per annum for very long and our very rich cousin will eventually stop putting their hand in the pocket. The minute Ansteel decide to stop funding the mine it is curtains for GBG and most likely curtains for KML as well.