Well a some more thinking and I am thinking these guys should get a locked in off take agreement as otherwise after expending on specific plant they do not have the skills and marketing ability to launch their own product so I feel they will be held to ransom and will possibly not achieve prices for raw materials. They take all the risk in a very small market controlled by some major players and think they will have the upper hand? Are the buyers risking their capital in building the plant?
We are dealing in the supplements area and with little science behind many and low barriers you really have to wonder if there is a marketing edge and margin in not doing it in a pond with cheap labour internationally. Ask the question - How much would it cost in Australia to manufacture in vats/ ponds and at how much lower capital cost?
If fashion changes in the supplements market where does the output go and how much of the capital equipment can go to other production?
So you have a profitable marketing / supplements company who says " yep i want some if you can make it" and AEB take all the risk with seemingly no equity at risk themselves.
Anyone see any brokers reports or know who is pushing the price or is it just existing holders clutching at straws not realising whenever they want it the instos will get a discounted issue as AEB needs $. $80 mill plant, 7 million staff cost and rent already accumulating at a time of year when nothing can be achieved. Not sure on they $80 million number either and if that is for initial production or going out 4 years but a big number makes a mayor think about a big announcement and later ribbon cutting.
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