cgnpc and rio, page-24

Downside risk....

7m shares sold today at prices ranging from $8.43 to $8.55 - a small discount to EXT offer price. Calculation sellers are making is that better to convert to cash now rather than wait for what they will believe is best case offer in some months time of $8.65. What makes them do that....

- belief that BEST CASE scenario for EXT is $8.65 (clearly I share this view)
- belief that return for waiting months to get $8.65 cash is between 0.22 and 0.10 cents (2.5%-1.2%) and they will do better re-investing cash in something else
- worried about risk that KAH bid fails due to less than 50% acceptances and EXT bid never happens
- worried that in the intervening months something gets in the way of a deal on KAH/EXT (e.g. Namibian government, ASX/ASIC, Fukushima Mark 2, due diligence problems) - BMN and Hanlong comes to mind....
- etc. etc. etc. etc.

On the other side the buyers clearly think a better offer may be around the corner. Time will tell.

In summary only way that $8.65 comes about is if both deals go through. If either falls away the share prices will go down - and if a minority of shareholders do not sell into the deals then I would expect the share price to fall away post deal deadline. Of course there is a way to guarantee pretty close to 98-99% of $8.65 and that is to do what 7m shares did today.

Did I answer the question?