Surprised they would announce a MOU with one of the companies that is involved clearly in a difficult situation, the parent of which is now in Administration. Having said that I would think there are any number of engineering companies that would love to get the work. Clearly China Nonferrous are the important partners here. They are the ones being appointed principal contactor and debt facilitator. Arccon are just sub contracting certain construction and engineering activities. It is just an MOU. As Rex said it is to provide a framework for co-operation. It is not ideal, but I do not think it is catastrophic.
I see CDU announced that an EPC contract has been signed with Sinosteel. Surely they will subcontract certain works to local engineering companies.
So I do not see how material it is. Obviously it is not ideal, but I haven’t seen any other companies who Arccon do work for rushing out to inform the market.
Clearly Rex is not for the faint hearted. We have China slowing, we have copper and iron ore coming off, we have gold getting smashed. We have AZG in administration. They need $800m or so.
Underlined - I don’t think you are Pat Malone in saying to avoid Rex. Perhaps if you had called it when Rex was $3 you could consider yourself astute. At present you are very astute in pointing out the obvious!!
Rex has a long life project that is HIGHLY leveraged to the copper price. Sure leverage goes both ways, but it does have the potential to spit out a lot of cash. We are getting to the very pointy end of any potential financing and construction deal. Rex have given a time line of Sept/Oct for Execution of the EPC Contract and a similar timeline for the Execution of the Financing Terms Sheet. Leading up to these Rex has stated they are looking at Potential iron ore off takes (including upfront payments), potential project sell down and potential copper concentrate deals.
The way I see it we only have until Sep/Oct to see if they get an EPC and Finance deal done, and anytime between now and then for any of the off take/project sell down deals…..the signing (or not) of which has the potential to significantly move the share price.
Watch this presentation again. Make your own call if you think Rex can pull off a deal.
