no logic, page-34

Um I never talked about risk I was questioning your statement regarding the GBG/Sundance merger. Seems not everyone is of your opinion as to what the cause of the non-merger was. I recall this from Dryblower (MiningNews) at the time (and you might note the part about institutional investors in Gindalbie AND Sundance refused to support it):

"When you tick off the plusses and minuses of haematite in Africa versus magnetite in Australia, you seem to get a roughly similar equation.

Or, at least, that's what Dryblower thought until institutional investors in Sundance and Gindalbie refused to support a merger for reasons unstated leaving sidelined observers like Dryblower imagining they prefer to keep the haematite and magnetite separate because one has more chance of success than the other.

And then Wedlock voted with his feet and moved from a pure magnetite play in Grange to a pure haematite play in Sundance.

There's a clear message here and it goes like this:

Magnetite is a perfectly good ore of iron. It is used worldwide, and even OneSteel in South Australia recently switched its blast furnaces over from haematite to magnetite. Why? Because the profits from exporting haematite are attractive, while the lower-grade magnetite, which produces more waste, or requires a lot of processing before shipping, is best used in a nearby steel mill.

Haematite is a higher-grade ore, perfectly suited to long-haul exporting. It's the stuff shipped around the world by BHP Billiton, Rio Tinto and CVRD. It's also the only stuff mined by those three giants of the iron ore world. Why? Because it is so clearly superior in the business of making money.

More water needs to flow under the iron ore bridge for a clear picture to emerge. But, what we saw last week was not good news for any of the magnetite hopefuls in Australia.

Perhaps it was the whole tricky processing question. Perhaps it was simply a function of the cost of energy.

Whatever the cause, it really was a case of people choosing their ores."