I had a talk with two old friends last week, about lithium, both...

I had a talk with two old friends last week, about lithium, both of them once worked for Goldman Sachs in Japan and Hong Kong, one stayed in Japan and married a beautiful Japanese woman - the lucky bugger.

Anyway, yesterday I thought I'd call them back and have a talk about gold.
I was kind of laughed at, but I don't mind, they are good blokes, and joked at my naivety.

Every company in China has a Chinese Communist Party (CCP) representative on it's board, or sitting beside the board in a cloaked or hidden position.

They described to me what they had seen a thousand times in China.

And that is, Zhaojin not being concerned at all whether anyone takes up their offer.

Zhaojin are simply extending the offer while they hold talks with the other two (2) major Chinese holders, and the CCP.

We will never see internal CCP memo's, but sometimes apparently it works like this.

China has been stockpiling more gold than any nation in the past 10 years, and no-one knows the real figure.

The CCP issue a memo via their company representatives, and the other two Chinese companies agree (eventually) to sell their shares to Zhaojin for 58 cents.

In return, Zhaojin has to agree to sell gold to those other two companies from production, and to the Chinese government, at an 8% discount to the spot price for the first five years - or at a gold ounce price that enables the other two companies to make something like double their profit within 5 years. And the CCP government also takes it's cut.

No Western governments, or funds, or investors, will ever see proof of these agreements or deal making.

My (former) Goldman Sachs friends have seen this happen a thousand times in Asia.

Most Western funds know about these practices, which is why they are reticent to invest here, given the share structure and Chinese ownership percentages.

This is why Zhaojin (apparently) continue to extend the time frame, while their negotiations in China take place.

It was an interesting story that my friends told me, though I'm still a little disbelieving in it.

The previous Norton analogy and comparison is very true though, we never got anywhere near what was fair value for that Chinese controlled gold stock in the WA goldfields, but in the end, after very long stagnant periods while all other gold stocks were booming, we were just glad to get out with some profit.

I'm hoping here that TIE might screw them all by eventually paying out a super-big special dividend to long holding loyal Australian shareholders.

The Chinese sure know how to play the long game though, and to navigate foreign bureaucratic regulations and structures.

Gw