Palmer tells China's CITIC to pay fair price

Australian Financial Review's reporter, Brad Thompson has written an excellent article which is very relevant to the buy out situation confronting the the retail shareholders of GBG.

https://www.copyright link/business/mining/palmer-tells-china-s-citic-to-pay-fair-price-20190521-p51ph0&ved=0ahUKEwjxgPfonaziAhWIL48KHeTNB9EQqQIIKSgBMAE&usg=AOvVaw3YgGuF8IPcUAeqXif0tPRe

The most enlightening part of the article is that Mr Palmer said $750 million was in the ballpark of a fair price for giving CITIC access to an additional 50 square kilometres on the tenements for a tailing dam expansion, waste storage and access to a bigger resource. This is on top of Mr Palmer’s Mineralogy receiving $100 million every 12 weeks in Sino Iron royalties (about $US10 a tonne) on Magnetite concentrate production based on WA Court of Appeal ruling.

This is a stark contrast to Ansteel's offer to buy out GBG from non Ansteel shareholders at around A$12 millions net cash. If the buy out is successful, Ansteel will get additional 1.66 billion tonnes of Magnetite Ore deposit on tenements Karrara and Lodestone ( KML-707mt, Lodestone - 956mt) at this pittance amount or almost free.

In comparison, CITIC had paid Mineralogy $200 million for the rights to magnetite ore deposit according to an Australian Mining's article dated 7 February 2014 and now has to pay royalties amounting to more than $400 million a year.

Even under these financial obligations, the management of Sino Iron and therefore CITIC are still confident about the prospect of the mine and planning to expanse it as mentioned in the latest CITIC Annual Report 2018.

The ultimate owner of both CITIC and Ansteel is the Beijing Chinese government.

Given the similarities between Sino Iron mine and KML Mine as shown in the following table and the willingness to continue invest in Sino Iron mine, there is no rational for the Chinese government towalk away from KML mine if a much higher buy out price has to be paid, may be a reasonable portion of Mr Palmer's $750 million for access to an additional 50 square kilometres on the tenements, $200 million mining rights and the $400 million a year royalties.

Retail shareholders of GBG also want China's Ansteel to pay fair price to buy out GBG.

It will be great if Mr Palmer can help poor retail shareholders of GBG to realised this and I will be eternally grateful to Mr Palmer.

Table - similarities between Sino Iron mine and KML Mine:

		Sino Iron mine	KML Mine
1	Magnetite Ore to be mined	3 billion tonnes	2.3 billion tonnes
2	Magnetite Ore option	3 billion tonnes	1.48 billion tonnes on GBG buy out (Lodestone)
3	nameplate capacity	24 mtpa	8 mtpa
4	Project's current cost	A$16+ billions	A$6+ billions
5	concentrate shipment in 2018 wmt	19 million tonnes	8 million tonnes
6	concentrate shipped since 2013 wmt	50+ million tonnes	38+ million tonnes
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