Ann: Change in substantial holding for DCN, page-2

Excellent news. The back of my envelope says the oxide ore at Cardinia could be processed at a margin of around $60 per tonne, so room there for both Kin and DCN to do OK from the Cardinia ore.

For Kin it would mean an income stream and an end to capital raising until perhaps, when mining reaches the sulphide ore, for Kin to build its mill with flotation regrinding. By that stage Kin would have a really good handle on the deeper ore and could go forward with less risk. Plenty of examples of mills built and grades not achieved or costs not contained to end in tears. Delphi have had their fingers burnt once already I think, so Kin will continue to be thorough about resource definition and costs before building a mill. Also, I think the St Barbara mill has flotation regrind capacity, so with a new MD there and St B still having a large stake in Kin who knows?

GMD is not in trouble, but they have been denied a ridiculously easy win, had they got to 90% of DCN. They would have had a large near new mill, cash in the bank from the stockpiles, and an ore inventory without expending any cash. Now they have control, but crucially they cannot use their board control to favour GMD over other companies. The DCN board has to act in the best interests of DCN, not GMD. GMD is stuck at 76% because who will sell for about 1.1c worth of GMD shares, which might drop in value, when they can get 1.3 to 1.4 cents on the market?

Down the track Kin Delphi hold the keys to GMD eventually owning the DCN mill and ore outright. A future bid would need to get to about 93% I think, because they would have to get 75% of remaining shares as well as reach 90%. They are going to have to pay more, and pay cash, for that last bit of DCN ... I expect Kin to make a profit when that happens.

The most interesting thing in a way is that Kin have indicated they probably don't want access to the DCN mill in the long term, because their future is with a flotation / regrind facility. Process up to 11 million tonnes for 400 k Oz, between the lines, and out interest in DCN would cease. The prospect is there for GMD to get DCN in the end I think.

Wait and see, I guess, but so far well played Kin imho.