An observation of the changing Tincom/ECT agreements:17/06/10...

An observation of the changing Tincom/ECT agreements:

17/06/10

The License Agreement provides for the following:

Exclusive right to construct Coldry export plants in Victoria, Australia and Vietnam in addition to the non-exclusive right to construct plants in the rest of Australia and Indonesia

Exclusive right to market Coldry in Victoria for 5 years, with a trigger to extend for a further 5 years upon plant expansion to 5 M mtpa be achieved within 5 years

Exclusive rights to manage and market Coldry product imports into Vietnam

Rights to build up to 100M mtpa of Coldry plant capacity globally to meet the rapidly growing needs of Vietnams economy

A free-carry equity stake of 10% for ECT.
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04/04/11

"TinCom must deliver suitable CSA to the venture to underpin required project financing

ECT may now also introduce CSA to the venture on a commission basis, as well as the option to contribute additional capital for which it shall receive additional shares in the JV Company"
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Notice the term "exclusive" was extensively used in the June 2010 crawling license ann.

In the recent ann the term "exclusive" was not used once.

Seems the tide has changed in a year - thermal coal was about $90 then...now its $130 and obviously going to be $110 + long term. Tincom got caught napping it seems.

Fortunately, ECT were on the ball and pursued the Chinese and others.

Some here mentioned at the Nov AGM ECT said there are several "other" groups ready to take over if Tincom cant handle it.

Looks like thats the case - Tincom no longer have exclusivity - looking at the problems they have at home with their electricity sector - they obviously want to go head first into Coldry...but cant afford it...imo

Assuming ECT do "introduce CSA's to the venture" - it will be a massive bonus to us s/holders. The market cant qualify Tincom - but it will rerate (again) ESI swiftly on any sniff of Chinese involvement.

Look at the recent ann's/newsletters - ECT are almost "exclusively" focussed on the Chinese. Where are the unprecendented large scale test burns happening...locally and offshore? I think it was about 6 mth ago ECT ann the Chinese were sending their coal over to be Coldry'ed in the JCS new gear and then sent back to burn in China.

Kos has had a few trips to China in that time span - so how are the burns going?? Cant see they can be anything other than very positive.

Look at BHP/Koppers comments recently - the Chinese are very proactive. They would likely have no hesitation in building rail/port in stable Vic - look at what they build in Africa!

And re Chinese/Matmor.

Traditional steel making requires high grade coal and high grade iron ore.

Matmor requires low grade coal and low grade iron ore.

China has enormous quantities of low grade coal and low grade iron ore....and very little of the high grade.

China is incredibly ripe for both Coldry/Matmor. Maybe BHP/RIO/Vale might see ECT as tasty at some stage?

Market atm doesnt even believe ECT can survive LJC. I reckon next week will catapult ECT into some serious radars.