My main concern is that this exclusivity extension will continue with no compensation (now that a precedent for free extensions has been established), thus restricting the ability of Havilah to market these iron ore assets and create competition for them.
By doing this, the Board has placed SIMEC Mining in an even stronger position to drag out negotiations till Havilah's cash flows are depleted. The downside, SIMEC Mining purchases Havilah's iron ore assets for significantly less than their fair value.
Walter Richards negotiating with SIMEC Mining does NOT inspire confidence in me.
His deal making skills with CMC has left Havilah shareholders with a significant credit risk exposure on the receivable of $12.5 million. To date $nil has been collected.
What if there are further delays by CMC or it decides to shelve the project altogether? Is the Board’s strategy to give away the iron ore assets for a pittance because it needs money to pay back the drawdowns under the Investec loan?
Why is it that Havilah is always negotiating from a position of weakness: Bergen, CMC, NAB overdraft, Investec, SIMEC Mining?
DYOR
HAV Price at posting:
14.0¢ Sentiment: None Disclosure: Held
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