I think there is much more behind the BFS and JV delays.My...

I think there is much more behind the BFS and JV delays.

My feeling is that NKP/Xstrata are clear partners on this allready and are working on a mutually beneficial plan to mine these giant size PGM deposits.

1. Both parties would like to keep the capex and opex as low as possible in order to maximise return. The updated BFS will indicate the improvements on both these areas.

2. I would say that Garatau and Tubatse are not seen as totally seperate. Once the court case is resolved it will not surprise me at all for a plan to be fast tracked for mining the shallow south farm deposits as a potential starting point. Both projects together would bring the necessary scale ecomonies for construction of an own smelting facility.

3. We should not overlook Xstarta's Merafe ferrochrome JV in the same area of SA. There are potential cost efficiencies for Merafe to treat chrome ores left from near by PGM operations. This further improves the combined project economics of Xstrata SA. Also with the Merafe JV, Xstrata has strong experience in having a succesful relationship with BEE partners and probably why NKP also prefer Xstrata to other potential partners.

4. I see that NKP will be the final JV vehicle between Merafe and Genorah and possibly some other small BEE interests for Tubatse - something following the Merafe model. The 100% funding for 50% share is not the final agreement and I would well expect to see amendments to bring new SA/Asian investors into NKP as well as introduce debt. Further on debt it does not make sense to fund 100% of the project from equity sources, so I expect to see NKP as JV vehicle to take out debt funding as well. (I am not well versed on the SA tax system but would expect NKP to be able to deduct loan interest from profits in order to determine the tax base. If anyone has a clearer idea on this I would be very interested to hear their view).

There are therefore many complex scenarios to consider but what should not be in doubt is that Garatau/Tubatse is a multi billion A$ proposition and exisiting NKP shareholders if they are patient should be realising huge gains when the green light for their development is given. Nothing is ever certain, but the PGM economics and SA wish not to miss the next resource boom like they did last time, derisks this enough for me to sit tight long term if necessary.

For those that refer to D&D, I think the above should be a clear indication why they do not set a stop loss on NKP. The potential is huge and we should not sell out as a result if short term movements.

BR
Max