I read that sommeone suggested that Shougang may be interested...

I read that sommeone suggested that Shougang may be interested in taking a stake in ADY. My thoughts....


ADY only hold 60% of the Chilean ( Santa Barbara)assets. If the Chinese move on ADY they will purchase only a % of the 60% iron ore holding. I query whether that is a good move?

As Leonard Klein has lost interest and management over the Santa Barbara operation a better alternative may be for him to sell his 40% stake to either Shougang or ADY. Then both ADY and Shougang can go gangbusters in developing new mines, building infrastructure and exploring new sites.

This gives ADY a similar path to what has happened with the Santa Fe Joint Venture between Klein and the Indian Steel company. Under my scenario both ADY and Shougang share the ongoing costs and profits on a pro-rata basis. ADY share of costs can come via its sales. Contracts are sealed and a rosy future for both companies via increased production/dividends etc.

A new Chilean iron ore company can be structured and then listed on a foreign stock exchange such as Hong Kong. ADY and Shougang can then have a major equity holding in such a company. Eventually ADY may sell off its share at a premium and invest into local Aussie projects.

Any views?