this could end badly, page-58

PP and others

Apologies for posting this again but PP and I are both guessing the future and motives of the dominant player.

In 12 months we will know which is correct.



If I was Ansteel; and

If I considered that KML was capable of delivering 8-16mtpa magnetite for 30 years; and,

I was sensitive geopolitics; then,

I would be doing everything possible to make my JV with GBG work, even if it means “adjusting” the cash flows so that KML and GBG can retain their position in the JV.

My strategic position would be that the “equality” inherent in the JV gives me 67% on the project value while guaranteeing me ( as much as anything can be guaranteed) social and political stability. [To get to 70% and be thanked for it is a bit of a bonus.]

I would remember that the agreement was structured in the way that it is because I was convinced (probably by GJ) that the expectation of 30 years of harmony is best assured by the perception of a fair and successful transaction. I would also understand that in a changing world my best interests are served by aligning my interests to the interests of my JV partner and those of my host country.

I would also be aware that I am part of the management team which is responsible for the mistiming of the commissioning which has resulted in my junior partners cash problem. I would need to be careful not to be perceived to have taken advantage of the cash shortfall.

This all seems consistent with the adjustment of cash flows. This looks like a deal targeted to retain equality at project level but incorporating a 2.5% of project as security in case GBG stuff up in those parts of its operations that don’t concern Ansteel.

Ansteel will then have control of the JV when dealing with a restructured GBG or an administrator.