capital raising, page-56

Vic, I tend to think GF have probably had their own agenda from the outset and maybe JT never quite realised it until post that report of March this year. A reality check for him if you like, where in the past he thought he was comfortably in bed with an elephant who would do all the heavy lifting, and maybe one day buy him out at fair value.

The point I make is this. GFA's cessation of drilling is co-incident with the March report, yet not long ago they made a pitch for more of the company. Why ?

Now even a slow thinking WA mining company director should be able to put two and two together here, and to give the bloke his dues he has acted pretty quickly, and in a decisive manner. Indeed, his moves in recent months smack of empire building, therefore he seems to be worth the money you speak of.

As to GFA missing a TO opportunity when the price was lower. Well I would contend TO situations tend to bring on a sharp reality check for the share price, it being a very elastic connection to fair value.

The usual TO pitch is to leverage off a weighted average share price for say, the last three months. However any director worth his salt should be able to defend this simplistic approach with sensible asset valuations, realistic expected revenue streams, etc. Which means the share price will rapidly head towards fair valuation. Whatever that may be.

Notably in CQT's case, the directors in recent times have taken the trouble speak of NPV, and have also embarked on a program of better defining the extent of the resource. Which of course will increase the NPV they speak of.

In other words get rid of sentimental valuations most retail punters seem to be in love with, the share price, and speak of hard nosed valuations.

Digging up Mt Carlton is a business like any other. How much for infrastructure, how much per lb for extraction costs of the stuff they dig - matched with the revenue stream and how long it is expected to last. That is, the extent of the resource.

# On infrastructure for the purposes of digging. Well in recent days it looks to be pretty well sorted

# On extraction costs. Well we already know it is low cost regime

# On the revenue stream. Well the price of gold is heading for the stars, indeed more or less an inverse of the US$, which is a bit of a shame because the ownership of gold in the years to come will be seen as protection money for this very contingency. However, realistic investors will be looking for a match out of the Gold price in Aust$ to see if it keeps pace with the US$ decline. (Yeh, I know this will probably be a brand new line of conversation with some of the train spotters here)

# Lastly, on the duration of the revenue stream. Well blind Freddie can see the directors of CQT, are at last bent on expanding the resource. Which is something that GFA did not want to happen. Given that the asset base is what the company is really about, valuation wise. Indeed, if GFA had their way, the place would be described as fossickers playground

This said, I still think GFA could buy this company for fair value in the year 2009, which might look like a steal in the year 2015. However their window of opportunity to partially steal the assets has now closed. Complacent management, and all. Consequently as an alternative they can choose to leave their 20% ownership on the table and walk away as passive investors. In which case they will make a bundle anyway. Given a bit of time.