CZR "FOMO", page-514

Worth 45-50c post FIRB approval IMO. Trading at a huge discount on the prospect of a FIRB rejection. Too big a discount given that if it is rejected, we still hold the asset with a NPV of about $1B over 8 years with a moderate IO price. Base case scenario offers significant returns at current SP. Current case is exceptional value at a sub $100M market cap.

Minimal reason to actually reject this from a government standpoint. Asset is too small to offer a foreign entity significant influence on the country. If it was media, public transport or something like an integral utility for this price, it would likely be rejected without much deliberation, let alone multiple extensions to a final decision.

I foresee significant backlash from residents to excess government impediment to free market economics if they do reject, it will be seen as government overreach. It would deteriorate relations with China, which is not what anyone wants, China has recently opened imports of AU goods following post COVID trade war. If this is rejected, China and the world will blow it out of proportion and possibly reignite tensions and hurt trade benefits enjoyed by both sides.

The asset for sale here is insignificant to the broader picture that the prospect of rejection is very much unwarranted. Especially for a small asset which still requires heavy lifting to actually get off the ground. It is not an established mine, AU benefits from the incoming development that will be provided. CZR approval of the offer sends the signal to the government.

The fact that the final decision has been extended so many times tells me a few things.

1 - They want to convey the image that they are looking into it thoroughly, deliberating, taking in all the possible scenarios and pros/cons, when in reality they probably made a decision on the matter withing a few days after receiving it.

2 - They want to convey the image of power and control to all involved, especially the foreign entity buying in.

3 - They have likely approved the transaction but are extending to cast doubt. If the proposed deal was a hard no in the eyes of the FIRB, there wouldn't be so many extensions. A firm rejection would have come across within weeks of submitting the proposal.