beginning to believe the impossible, page-5

DP has said that what is happening in today's global markets, with the collapse of commodity prices, the problems in Europe, new Mongolian resource laws, the share price collapse of AKM etc... etc... is not that relevant to AKM, because AKM are not going to be a seller of coal for 3.5 years. Some might dispute this view of things.

He also said that at 50 cents a tonne, AKM might now be considered a takeover target (which is perhaps what the directors want). But how many shareholders want them to sell the project for double the current share price, approximately 30 cents a share, when many shareholder paid 70 to 80 cents a share just a few months back?

It should also be pointed out however, that DP did not take the cost of building a USD$2 billion railway into his calculations of 50 cents a tonne. A somewhat naive oversight perhaps, for an MD.

There is no way that AKM are going to raise USD$2 billion by themselves in order to build a railway. And how many banks are going to lend that sort of money in today's troubled financial markets? The money of most banks, is going into buying European government bonds, in a futile attempt to keep those socialist welfare states solvent.

Unfortunately, AKM is looking less like a Riversdale type success every day, principally because Riversdale were lucky with the timing. Now we have Rio and BHP and the other majors scaling back their future investments, rather than expanding, which essentially leaves AKM with a superb Coking Coal deposit, stuck out in the back-of-beyond, with less hope of development, because the infrastructure is too expensive to build, and the world banking system is collapsing.

AKM have not done anything wrong, the world's bankers have, and the timing has just been damn unlucky for AKM. Some say it is all about the timing (and luck, and good management, of course).

The next year will significantly test this board's abilities. We will all get a chance to see what qualities they are actually made of.

Gw

Do you think the path to wealth is always pure and honourable?
(HBO Series - Game of Thrones)