its not what it was is it?

People who follow this forum probably think that I’m some sort of opportunistic blow-in. I had been, up until this Monday when I sold all my shares, a relatively long term holder of the GBG, having first invested back September 2006 when a mate of mine who had never invested in stock market asked me to check out GBG, whom he had thrown a bit of money into. This mate of mine was a close acquaintance of David McSweeney the managing director at the time (if I recall correctly). I knew the company had been into gold and did a bit of quick research to discover the switch to the IO play and that a funding and JV agreement had been signed with Ansteel. On the back of this I told my mate that I thought it sounded OK and jumped into some myself at 42 cents. I successfully traded the stock for many years after that and always rolled my trading profits back in to the company to increase my shareholding. When the SP dropped to its low this year my average was about 36 cents. As people who follow this forum might know, on the back of the funding announcements of 10 June and 2 July 2013 I decided it was safe to start averaging down, which I did getting my average down to about 20 cents, before selling out on Monday for 13.5 cents.

I am really flabbergasted that very few people on this forum are questioning the 10 June and 2 July 2013 announcements.

At the core of the 10 June 2013 announcement was the following statement.

"Subject to final agreements and satisfaction of conditions precedent, including Foreign Investment Review Board (FIRB) approval, Chinese regulatory approvals and bank consent, Gindalbie’s stake in Karara Mining Limited (KML) may be reduced from 50 per cent to a minimum of 47.84 per cent as Ansteel undertakes to provide all required bridging loan finance to KML to fund any cash shortfalls over the next 12 months."

At the time of the release of this announcement, and as a shareholder of GBG, I would be entitled to believe that subject to a final agreement being concluded and subject to the satisfaction of some conditions precedents, that Ansteel would undertake to provide ALL REQUIRED BRIDGING FINANCE TO KML TO FUND ANY CASH SHORTFALLS OVER THE NEXT 12 MONTHS.

On the 2 July 2013 the company released an announcement telling shareholders that

"Further to the ASX Announcement of 10 June 2013 regarding the restructure of the Karara Project and funding arrangement with Ansteel, Gindalbie Metals Limited (ASX: GBG – “Gindalbie”) advises that Karara Mining Limited (KML) has received an $84 million cash injection from Ansteel, representing the first instalment of bridging finance to cover Karara’s working capital requirements." and

"Under a Binding Memorandum of Cooperation between Ansteel and Gindalbie which has now been concluded, Ansteel has undertaken to provide bridging finance to KML to fund forecast cash requirements over the next 12 months."

So at 10 June the conditional "non-binding" agreement was that GBG’s interest in KLM would be diluted to 47.84% from 50% and Ansteel would undertake to provide ALL REQUIRED BRIDGING FINANCE TO KML TO FUND ANY CASH SHORTFALLS OVER THE NEXT 12 MONTHS.

Then on 2 July 2013 we were told that further to the 10 June 2013 announcement we had a "binding" agreement with Ansteel.

Question: What is the stated difference between the “binding agreement” announced 2 July 2013 and the conditional "non-binding agreement announced on 10 June 2013?

Are they the same agreement?

The “binding” agreement only refers to an $84 million cash inject representing the first instalment of bridging finance to cover Karara’s working capital requirements to fund forecast cash requirements over the next 12 months as opposed to ALL REQUIRED BRIDGING FINANCE TO KML TO FUND ANY CASH SHORTFALLS OVER THE NEXT 12 MONTHS under the "non-binding" agreement. The 2 July 2013 announcement does not refer to any change in the agreed dilution from 50% to 47.84% reflecting the watered down agreement between 10 June and 2 July 2013. i.e. from ALL REQUIRED BRIDGING FINANCE TO KML TO FUND ANY CASH SHORTFALLS OVER THE NEXT 12 MONTHS, to the watered down “binding agreement” to FUND FORECAST CASH REQUIREMENTS OVER THE NEXT TWELVE MONTHS”.

Wouldn’t it have been a lot clearer for shareholders if the company in its 2 July 2013 announcement had have emphasised that that the conditions of the "non-binding" agreement had been changed (watered down). I personally got badly caught out by this nuancing.

Also in the 2 July 2013 announcement (the “binding” agreement announcement) the company advises shareholders that “ that Karara Mining Limited (KML) has received an $84 million cash injection from Ansteel, representing the first instalment of bridging finance to cover Karara’s working capital requirements”.

It would be reasonable to infer from this that the $84 million cash injection was the first instalment under the binding agreement, with presumably at least another instalment to come. I might be stupid, but I can’t read this any other way. What happened to the second instalment? There has been no announcement that I know of by the company to clarify this issue. If only one instalment was intended under the binding agreement IMO they should not have used the words “first” instalment as this mislead me into think there was at least another instalment on the way. They could have used the words “first and only” instead or just not used the word first at all and said only that further to the 10 June 2013 announcement they had received $84 million to fund forecast cash requirements for KML over the next 12 months. That is, that GBG were to exchange the 2.16% controlling interest in the mine for $84 million dollars full stop, which I presume is what has happened.

I can’t believe that no one in the media or on this forum are not asking the same questions. Have I missed something obvious that is staring me in the face? I couldn't have been the most stupid shareholder, could have I?

We swapped our controlling interest in the mine for $84 million, instead of a 12 month bail-out which is what I believed. Silly stupid me.

By the way I'm enjoying having my cash back in hand and not having to worry about this company anymore. Next time I invest in GBG I think I'll hire a lawyer to interpret their announcements for me.