possible scenario, page-49

Cass:

'at the end of the day there is no chance in hell of this company going under both GBG and ansteal have put too much time and money to let it go to crap , the infastructure in place eg; port, rail, power , and sheer size of the mine and growing over the next 30 years plus , new ceo in BHP and he will be looking to expand there IO portfolio might just look at GBG in the next year or so , just thinking out loud of course , but what a great assett to a company like BHP all hard work done and cheep as chips . Cass'

You have to be kidding?

I'm all for the success of GBG, but BHP? Really? They don't have a single magnetite mine. The new CEO is all about cost cutting, I doubt higher cost magnetite fits under that agenda... Look at the new CEOs track record..

The only small iron ore co that would be of value to BHP could be AGO for its port allocations. However there is currently dispute with this, i.e. a T/O of AGO may not allow the port rights to transfer to the suitor.

Not to mention Ansteel hold 50% of KML and 36% of GBG. They can block any suitor as they own >10%. The only logical suitor is Ansteel, no one else would/could bother. Furthmore BHP has a huge reserve of high quality DSO which can be extracted for a fraction of the cost.

What could happen to GBG:

- Iron Ore price crashes, KML requires further working capital to supplement losses. GBG cannot fund, so Ansteel tries to mop up GBG for a minimal amount.

- Same as above happens, but a dilutive rights issue occurs.

- GBG sells some of KML (ie Karara) to Ansteel to fund what it cannot provide to KML.

UBS is predicting $70 a tonne in September 2013. God help us if that happens. Although I don't see this unless a global shock was to occur.

Basically once this bloody company can prove its cash flow positive and generates sufficient margins to repay its debt later this year THEN it'll rerate up. If our market cap wasn't so low this wouldn't be such an issue. But we haven't recovered since the flash crash then the final bullet being another dilutive capital raising.

I may sound negative, but these are the cold hard facts. I own 100,000s of shares at much much higher levels, so I hope for a recovery as well. But the issues identified above are part of the reason for the low share price.