I own both REY and AFA shares and thought REY followers would be interested in the announcement today from AFA as I think it has a direct bearing on the current take over offer by GNM.
AFA holds a large number of tenements that surrounds REY's. Specifically the Duchess-Paradise tenement coal seam crosses into AFA’s South Ellendale tenement (of which drilling has commenced). Today AFA announced a Strategic Co-operation agreement with China Construction which is owned by the company China State Construction & Engineering. This is a Chinese state owned company that does all of China’s strategic construction works.
The agreement states that China construction will partner with AFA as they anticipate considerable infrastructure and port development pending the establishment of resources which given the location of South Ellendale to Duchess-Paradise looks pretty good.
I can’t imagine China will be too happy with developing the infrastructure and ports in the Canning Basin only to see the resource head off to India. In fact I think they will buy AFA in the process but if they are partnering with AFA I think they would want REY’s resources as well.
As I mentioned, I hold both stocks but think this announcement makes the GNM offer even more unattractive. I am interested in people’s thoughts.
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