Ann: CAP and Pure Metals agree new JV to develop , page-7

re: Ann: CAP and Pure Metals agree new JV to ... The J/V that CAP had with the BMG was a fantastic deal for CAP and was a major factor in my decision to invest in CAP. But simply, the deal was to good to be true and BMG crumbled. Remember,the judge stated that if ASI had not injected funds into BMG, it would have been insolvent. IMO, there was zero chance of signing up another J/V partner on the same terms as we had with BMG.

So to measure the current Pure metals J/V with the previous BMG J/V is unrealistic when you considered the following:

# Bottom line is that an asset is only worth what a buyer is prepared to pay. In this case, the best offer that the liquidator received was $3.25 million plus the $3.7 million owing to CAP, so total of say $7 million for 40% of our HIP..

# Under the Puremetals J/V, Puremetals have increased their offer from $7 million to $12 million, as they will pay the $3.25 million to the liquidator, payback the $3.7 million owing to CAP and have committed $5 million to progress the BFS at Hawsons. So, a $7 million deal has now become a $12 million deal.

# The market cap of iron ore explorers and producers have been smashed the last 12 months or so. Look at other juniour explorers, like MEP, junior producers like GRR, PLV and GBG. Look at the bigger players like RIO, FMG and AGO. Iron ore is very much out of favour at the momennt, not what you want when you wish to raise capital.

# How many major iron ore producers / explorers are putting projects on hold, delaying investments and focusing on cost reduction rather than exploration? CAP now has the ability to keep moving forward whilst others stop. When the sentiment tide turns, CAP and the HIP will be in a stronger position than other greenfield projects.

I also hold AGO in my SMSF. When you consider AGO is at $1.10 per share, AGO has a market cap of $1 billion, cash in the bank of $300 million, existing production, exploration upside, great port allocation and is generating approx $25 million of free cash flow per month. Now, offer a 100% premium to the current AGO share price and you could get the whole company for $2 billion, still cheaper than getting Hawsons into production.

It is in this context that I think the deal with Puremetals, in this current environment, is a good deal for CAP shareholders.