some maths which will inevitably be wrong..., page-65

It really was a terribly poorly worded announcement. Using ACE and Alliance interchangeably is very confusing.

I was under the impression that ITOCHU would be acquiring 40% of ACE (not AGS) at the two month weighted average price of AGS shares at the time of conversion. So IF the share price is based on the worth of 4Mile, other projects owned by AGS and how much cash is in the bank, the price ITOCHU pay will have to include these assets even though they are only getting a 40% claim in 4Mile (not the cash or other projects not owned by ACE). ITOCHU do get a 5-10% discount but arguably 90-95% of AGS capital is in 4Mile anyway, so it makes no difference to ITOCHU if they buy a share of ACE at AGS prices.

I gather that the strategic alliance is a similar arrangement to the 25:75 split between AGS and Q (except AGS hold the majority). AGS have to get the money to build the processing plant from somewhere, so i can accept selling 40% of ACE.

My only problem (and without more information, it is a BIG problem) is that nobody knows what ‘the two month weighted average price of AGS shares at the time of conversion’ will be. AGS is way undervalued at the moment (as are a lot of other companies at the moment). Even after Final Determination it may take a while for a more representative price to be reached. Meanwhile ITOCHU can walk in and take their 40% at a hugely discounted price.

Time will tell.