the future's very bright, page-27

Shady I am here and still following closely when time permits. Your memory is sharp and i do work in Major Projects and Resources law. This issue of the t/o of Zari seems to be causing a lot of concern amongst posters particularly with the $6m cash component and how it will be raised.

Firstly ill say this. PEK's appointment of Jonathan Murray a little while back was a dead giveaway as to the boards intentions and it was a very strategic move. Mr. Murray is considered an expert in the legal fields of equity capital raisings and all forms of acquisitions and divestments. I think we are safe in his hands.

In relation to the whole takeover issue as a whole. I don't think an outside Co would make a substantial and meaningful move on Zari OR Peak (be it a predator, cornerstone or future customer) until the JORC is sorted and possibly some guidance on benefication work. From a legal perspective it is like a bank giving finance to someone they know nothing about and taking no security for the loan (not that it used to stop them in the US).

Whilst it is obvious we have a deposit there is still too much more work to be done before a company can make a definite and reasoned move. A lot of investors tend to mention a takeover willy nilly but it must be remembered we are not an Iron Ore Company. Rare Earths is a young and immature sector that contains plenty of uncertainty even with the companies leading the way (Lynas and Molycorp). It is not a proven industry outside of China yet. Hence why i don't think any 'worthwile' offers would have been put forward YET. Of course they won't be worthwile from our perspective as we have the advantage of all the info and know exactly what we are sitting on. This is why PEK's move on Zari is a masterstroke. We have the benefit of technical and detailed info on the project and are first movers and rightly so.

PEK's takeover of Zari is ideal given the flexibility it will gain in negotiation, obtaining approvals for the project, financing, capital raising to a cornerstone and future takeover scenarios. What it all basically means is that we do not have to worry about conflicting objectives between Zari and PEK over the direction the asset development will take and it will simplify, centralise control and give expediency to the assets development negotiations and financing (how many times have you seen JV's fail or fall out over these issues and others issues such as the solvency/liabilities of JV partners affect commitments to projects)

This whole worry over the $6m is being blown out a little by the nervousness of the overall market. There is no mention that this six million is upfront or when it has to be paid or raised and there is still a lot of time to completion and plenty of processes to go through (Due diligence, Shareholder Vote, Govt approvals etc).

I think that when it needs to be raised the $6m has a high chance of coming from a cornerstone at or after the Jorc stage. It can be made a condition of the t/o arrangement that it happen this way and the Zari boys get their shares in the meantime. At the end of the day any project involves risks and a $6m investment for what is looking like an asset worth hundreds of Billions is an outright steal.

From my perspective two key things:

1) JORC defines a proper asset, gives bargaining power when developing the asset or sets a clearer bid price for predators (i.e. they cant get us too cheap). It is most important.

2)Positive metallurgy/benefication work is a very bright green light for an offer to be put forward or financing to be arranged. These separation results are asset specific and the single biggest challenge to a RE company and their profitability (all good having a deposit yet if you can't separate the stuff efficiently you don't have a profitable asset).

Until the wider market gets some clarity on this an outright takeover of PEK is unlikely as no clever suitor pays for a valuable in ground asset that is not profitable at market. If we intend to develop the asset which i now think we do (see the post about the ad in the AFR for a new MD) these results also go a long way to securing finance for the project as the finance and its specific terms (Interest rates etc) will be modeled on the certainty of such factors and the cash flow they can generate.

Very comfortable in this stock gents. From a Projects perspective it is shaping up very nicely and i would imagine insto's/suitors/customers would be lining up and sweating on Peak's results to get in first.

There has been some excellent posting lately on these threads and some great tips on the races too. The PEK forum bodes well for readers in the spring ahead on both fronts!