lodestone, page-11

Your welcome!

Well basically all of our profits will come from KML, until GBG develops Lodestone or its other mines.

GBG will get 50% of the profits from KML. However I assume initial profits will remain in KML and pay off the substanial debt. Basically a dividend will be paid out of KML to Ansteel and GBG, we will receive 50% of the dividends declared which can be "GBG's profit" which can be then distributed to shareholders of GBG. From there the profit can be divided among the 716m (or so) shares that will be on issue. However on a consolidated basis GBG would record the 50% profit regardless of it leaving KML. So really we receive the same profit as before, but the new 190m shares issued will dilute our "current" entitlement to that profit - ie 526m shares were entitled to profit to a new 716m shares entitled to the profit. I doubt we will see dividends for a very long time (assuming we arn't takenover) as debt reduction and expansions will be the primary objective. Espicially since GBG has a target of 30mtpa+ by 2015. However I'd much prefer capital growth, it beats paying the tax on dividends.

I couldn't give you an accurate level of profit given the current financial crisis and uncertanity of new contract prices. We will have to wait until KML (GBG) establishes its contract price to Ansteel. IMO Infrastructure and labour costs shouldn't blow out given the number of lay offs and lack of economic activity. However i'm sure Ansteel will definantly want 14mtpa intial production due to their new ownership.