Evening rambles from the Intercontinental Hotel Adelaide......I...

Evening rambles from the Intercontinental Hotel Adelaide......

I think it is entirely possible that CGNPC did not intend to own the whole operation, and put the following reasons out there for your consideration:

* Their approach was to Kalahari, not to the ultimate owner of the resource.

* I am not aware of any mines where they are currently the operator, which would place a question mark over their expertise.

* They have signed Offtake agreements with other entities (Areva in 2010) rather than attempting to be an owner operator.

* During the original takevoer offer, they indicated that they were open to taking over the whole entity, which is a different emphasis than a stated intention.

* Someone else may be able to validate this, but I seem to remember they were going to seek an exemption of the ASIC downstream takeover requirements.

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If this possibility holds water, then I think they have been leaving the door open for Rio to become the Operator and major shareholder in the entity.

It would indicate that they are seeking sufficient weight to have a real say in operations, to be well inside the "corporate tent" and to assure themselves of supply going forwards.

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I also tend to think that neither Rio - nor Itochu are in the market to be sellers of their respective holdings, which means that any CGNPC offer will not remove Kalahari from being a listed entity on the sharemarket (20% or so not being for sale means stock market listing remains).

If this assumption is true, then CGNPC could launch a takeover, knowing that they can only get 70-80% of KAH.

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The actions of the Extract Board seeking for downstream takeover provisions to be enforced was a clear attempt to force Rio's hand (i.e. let the resource be taken over cheaply, or increase the offer and take it over themselves). I say force Rio's hand, because I don't believe they intend to sell their holdings of either Extract, or KAH - at any price that is likely to be offered, and Rio generally prefers to be the operator of its mines, and to be majority owner.

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Lots of thoughts tonight - and no red wine yet.

I see a lot of significance in the timing of the updated ASIC ruling - which the article points out is the first update in 15 years. No coincidence here, in my mind.

...enough thoughts for one post.