Few things, from what I have read Ansteel own 38% of GBG which is not 88% of the whole venture, it is 1/2*38%+50%=69%. I do not see them manipulating the stock too much given their overall interest in the mine and consequential knock on devaluation of their own assets, unless of course it was devaluing prior to takeover......just my thoughts.
I think a significant capital raising to fund expansion is unlikely unless it is immediately after the current ramp. The company will significantly increase free cash flows now that the concentrator is ramping and the infrastructure is all built. I think we just be patient and wait it out. The company will revalue once the data from sales/production is released following the ramp up activities.
A good example of expansion once infrastructure is built is the Christmas Creek expansion for FMG, cost them ~$360m to open this mining operation. This was a very low cost as compared with Cloudbreak for which the port and train line infrastructure was required. GBG mine has already spent $1.5 bn establishing the mine and building all infrastructure required (capable of 16 mtpa). Expanding to 16 mtpa will significantly improve interest coverage, earnings and utilisation of assets.....this should bode well for the share price.
One step at a time though...
KM
GBG Price at posting:
33.0¢ Sentiment: Buy Disclosure: Held
