take a chill pill, page-4

Thanks for your well thought our reply. Unfortunately, I believe a good deal of your assumptions are flawed.

First, you assume that the only player in town is China, for both funding and as a customer. By the way, China is not an entity but a nation and therefore there are many players within that nation that will also compete with each other for our IO. As much as China, as a nation, are the biggest single buyer of IO, they are not the only buyer.

Secondly, your example of 70 - 85% of final selling price being marketing, sales and distribution is a fine example if you are buying a Louis Vuitton handbag, but not a ton of IO. I mean, really, what brand building or marketing spin are you going to throw at a lump of IO??? The price is simply derived by supply and demand. Right now Demand is huge, compared to world supply and that is why the price sits where it is. Being one of the lowest cost producers in the world, means that even if supply exceeds demand substantially, other suppliers will drop out of the game before SDL, so we are pretty much guaranteed to always pump out the volume we choose. I would be very surprised if that price ever dipped below $62 and expect it will remain much higher.

I do not believe that the funding agreement will lock in the selling price of our IO. Look at GBG, which is commonly used as a comparison to the deal we can expect. They are not locked in to a fixed value. We may lock in a price that is spot less a small discount, but we will always be tied closely to the spot price imho.
By the way, GBG were also apparently 'at the mercy' of the financier and seem to have survived the ordeal quite nicely.

Let's let the game unfold over the next few months and see where we stand. I await it eagerly. Cheers.