I was there.After announcing the offer was refuted it was pretty...

I was there.

After announcing the offer was refuted it was pretty much business as usual. WR went into detail about the BFS and progression of the project thus far.

My take on "reading between the lines" and general meeting sentiment is as follows:

- The bid is not part of some executive conspiracy to sell the company and was a genuine surprise

- The bid is as crazy as it seems and the Directors are as perplexed with the terms as we are

- If there is some "hidden" buyer behind Wah Nam, it is a mystery to all

- Just a guess, but I don't believe anyone within BRM has any idea what Wah Nam's next move could be

Given all this, I think there is probably equal probability that this is as much and arbitrage play by Wah Nam as it is a genuine attempt to gain the business. Hence it is quite possible that those that are buying now in the hope of a big counter offer could at least get stung in the short-term. In the mid/long term the business looks to be in very safe hands.

The article below from Matthew Stevens on Nov 12 in The Australian shares my sentiments and is an excellent read.
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AUDACITY, thy name is Wah Nam International.

Here we have a Bermuda-registered, Hong Kong-listed company that runs airport limos and a marginal copper mine in Hong Kong and the People's Republic of China attempting to acquire a pair of emerging Australian iron ore miners in an all-scrip offer that is planned to result in the first dual listing on the Australian and Hong Kong exchanges.

To suggest that the complication of plans that Wah Nam loosed on us all yesterday took twin Pilbara targets Brockman Resources and FerrAus by surprise would be a fabulous understatement.

Sure, Wah Nam has spent $120 million or so accumulating positions of some influence on the registers of each target (22 per cent of Brockman and 19.9 per cent of FerrAus). But the idea that their new, still relatively unknown, Hong Kong investor might attempt to use its own paper as currency in a $1.16 billion pursuit of consolidation would, until yesterday, have seemed very far-fetched indeed.

It is said that Wah Nam's ultimate aim here is to create a single iron ore business with a critical mass of production enough to justify investment in a third railway to link eastern Pilbara mines with Port Hedland.

Apparently the infrastructure investment trigger being talked about here is about 40 million tonnes a year of throughput, which seems a bit light -- but then, Fortescue has more than justified its $2bn-plus investment on rail and trains on production numbers somewhat south of that.

And the fact is that a third link, given it is an open access system (and doubtless the Barnett government would insist that it is) would likely make economic a whole lot more of the currently stranded Pilbara resources.

Mind you, there could be other games afoot here, with the clear prospect that Wah Nam's initiative, which even the most optimistic would suggest is going to take some good time to fulfil, might well flush out other potential buyers for one or both of its stated targets, a situation that would be enriching indeed.

Wah Nam went into yesterday owning something like $188 million worth of two up-and-coming iron ore miners and it finished the day with $237m worth of stock.

The one thing to note here is that Brockman and FerrAus make a very good fit, and both companies know it. Both are members of the North West Iron Ore Alliance, along with Atlas Iron. (The other emerging Pilbara producer, BC Iron, walked away from the NWIOA earlier this year).

And while nothing formal has ever emerged, it is understood that consolidation, with its logic, has been a regular subject of conversation among the members of the alliance over recent times.

But, as BHP Billiton and Rio Tinto might attest, having good ideas in iron ore consolidation is one thing, delivering on them is quite another. And, to be very blunt, it is very hard to see how on earth Wah Nam is going to get its deal from thought bubble to final, efficiency-enhancing reality.

The essential prerequisite for success here is that shareholders of both Brockman and FerrAus identify Wah Nam scrip as acceptable currency. Right now, that seems very, very unlikely.

I mean, the 2009 numbers show that 85 per cent of Wah Nam's income was generated by airport limo and bus concessions, with a spare 15 per cent coming from the sale of PRC-based copper, zinc and lead concentrate sales.
While we are talking about Wah Nam scrip and its value as currency, it is worth considering that the average trading multiples on the Hong Kong market are much more generous than on the ASX, and that, to some degree, what is on the boil here is an attempt to arbitrage that substantive difference.

Wah Nam began soaking up Brockman and FerrAus scrip in June last year, and between then and now its share price has been rerated to the tune of about 80 per cent. Some argue that revaluation reflects only the higher multiples that investors in Hong Kong put on the now material Brockman and FerrAus stakes.

So a goodly chunk of the $6.47-a-share value that Wah Nam ascribes to is 30-for-1 offer to Brockman shareholders is actually a product of the Hong Kong company's 22.3 per cent of the Brockman.

Ditto FerrAus.

Another point of fragility seems to be that Wah Nam is presently a cash-lite business and one still at the starting point of its proposed (and rather strange) transition from tollway operator into mainstream mining with a particular focus on iron ore.

The man behind this shift in strategy seems to be chairman and senior shareholder Luk Kin Peter Joseph, a former chief executive, deputy chairman and senior shareholder of China Mining Resources Group.

The interesting thing about China Mining is that when Luk Kin Peter Joseph left in 2007, he was replaced by Dong Wenxue, a former secretary of the Communist Party of China and once a "National model Worker" in the non-ferrous industry.

China Mining, in other words, is evidently overtly influenced by the PRC.

On the other hand, there is no obvious sign of PRC influence on Wah Nam. Its biggest shareholder is a well-known Hong Kong toy magnate named Cheng Yung Pun, while the top five shareholders control 35 per cent of the business and independent analysis suggests that the free float of Wah Nam accounts for about 55 per cent of the register.

Nonetheless, questions need to be asked and answered about whether there is any substantive PRC engagement with Wah Nam, either as an owner or financier of the business.

Certainly, the fact that its shift into the mining business began with the acquisition of mainland Chinese assets would suggest there is a level of PRC comfort with Wah Nam management.

Now this is not a space over-weight in its concern about foreign investment in general and Chinese investment in Australia specifically. Obviously our FIRB process will get to the bottom of these issues, as will, I am sure, ASIC, which needs to approve both Wah Nam's IPO application and the arrangements that would underpin a dual listing arrangement which has a precedent -- but only one (Sino Gold was listed here and in Hong Kong, but it was taken out by Canadian Eldorado Gold late last year).

The central point to make on the national interest issues is that if Wah Nam acquires their iron ore businesses, there needs to be a serious level of comfort that it would transparently seek to sell its product at daily quoted market prices.

But that presumes, of course, that Wah Nam really is essentially serious about taking out these companies. Quite frankly, we have a long, long way to go before we can be sure that is the case.

While the offer document has been lodged, very little else of the formal work is under way.