why mehdiabad is valuable to us

1. The agreements that were purported to have been cancelled date from a pre-Ahmadinejad era when it was uncommon to have "buy-back" agreements. My understanding (not perfect) is that buy-back agreements are designed to limit the huge amounts of wealth that can be transferred from the host country to the builder and operator of the mine due solely to rising prices of the commodity that is extracted from the ore. We NEVER entered any such buy-back agreement. We retained the zinc (and other metal) price upside. That alone is worth a great deal (i.e. in investment jargon: the present value of it).

2. Our agreement was structured such that the more of the initial high risk exploration work we did, the more ownership of the mine we were entitled to (up to a limit of 50%, I think). The Iranians have been reluctant to convert our exploration expenditure into greater ownership (probably because there was no buy-back agreement)

3. Just because any new owner of Mehdiabad might be forced to have a buy-back agreement with the Iranian Govt. does not mean we should be forced to sell at a price as if a buy-back agreement was in force now. The Iranian Govt. must take the hit, not us.

4. It is a moot point whether we can be forced against our will to sell out now. Article 44 (of the Iranian Constitution), which requires State owned assets to be privatised is arguably being violated if we are selling out to Bank Saderat, since Bank Saderat is mostly a state-owned bank. We are violating Article 44 if we sell back to them.

5. So far it is a combination of our MD apparently making out Mehdiabad is worthless (to the brokers like Paterson whom we buy services from) and of the Russian press (later picked up by OVERSEAS Iranian Radio stations like Radio Koocheh and Agence France Presse/Reuters - who get their info from reading the RUSSIAN press - who are highlighting our non-involvement in Mehdiabad's future. The only reports I've seen in the Iranian Persian language press have been either to deny the transfer of Mehdiabad (ISNA 6th Sept 2011) or have been reports of what the Russians are saying.

Fight for a decent return from Mehdiabad. Nothing less than $94m. Hold our M.D. to account.

p.s. I think he is doing a good job on Namibia now and I am not expecting him to go overboard on the Iranian culture stuff, although I expect he could benefit from listening to some of those frenetic Persian violin rhythms intertwined with sequences of the Persian hammered dulcimer and the tonbak drum that choreograph well with boob shimmies and the snake arms!