Hi Denial, I waited for others to answer your question first....

Hi Denial, I waited for others to answer your question first. Not much response to it yet. I apologise for the delay and length of this reply but it's a far more involved matter than space allows.

As far as making this work for GBG shareholders as well as themselves, then yes, Ansteel and GBG have a common goal. As far as the outcomes they are wanting from the project, then they are on opposing sides on some major issues.

It should be becoming rapidly clear to everyone that the picture is changing continually and GBG are certainly not adhering to the script for a number of reasons. Referring to quotes from the BFS or previous announcements, etc. is now a poor guide to the future.

In that sense, the ball is on Ansteel’s side now. GBG shareholders not associated with Ansteel now own only 32% of their most valuable asset. Karara has about 4 billion tones of magnetite itself, all the other deposits are spread over the map and in total amount to a fraction of that, and a lot of it is not as easily mineable. GBG is Karara for the visible future, no doubt about that.

Some genius recently said GBG was a “nothing company 3 years ago”. Well, 3-4 years ago we had 100% of Karara, the JV with Ansteel then reduced that to 50%, and now our share of Karara has reduced to 32%. Ansteel effectively owns 68% of Karara and 36% of everything else. You don’t read that in broker reports! 6 months ago, GBG were adamant that wouldn’t happen. I posted it was a possibility before they announced the placement. Can’t "totally" blame anyone, that’s just how it turned out.

So, how are their interests aligned completely with GBG shareholders (non Ansteel associated) when they are steadily taking control of our main asset and their priority is to source ore and concentrate as cheaply as possible while GBG’s priority should be to achieve the highest prices possible for the ore and concentrate?

If IO prices improve, then everything’s fine and GBG benefits. If prices drop to their longer term average or less, then Ansteel benefits and GBG “may” find themselves faced with selling close to cost of production to honour commitments to Ansteel.

The alternative that other companies are using is to shut down mines until prices improve. GBG won’t be allowed to do that. I doubt Ansteel will forego their agreements and agree to that and have the Bayuquan steel plant lying idle because its feed has stopped. Remember, at the time those agreements were drawn up, GBG never envisaged what has unfolded now.
As an example, up until late last year, GJ was actually still predicting a price rise of 10% for 09 when analysts were all predicting falls??? I said at the time he was wrong. He's changed his forecast now but we'll know in a few months for certain.

Ansteel is also entitled to 36% of any vote brought forward. Like you and Riddick, I envisage in the next year or two Ansteel will be making further plays for other companies through their GBG association, through a new JV company.
The only way GBG could remotely contemplate participating in any such acquisition would be by debt, or, by issuing more shares to Ansteel to fund their interest. Since GBG will have no profit for years, I’d say they’ll have to opt for the latter and Ansteel will creep further up the register.

That doesn’t mean I think it’s all bad for GBG in the end, on the contrary. I like their future prospects but I also understand we are not going to see the returns we once expected- for a lot longer now. The timing has sucked for GBG (and others) and the board’s lack of iniative and prudence to raise capital when they had distinct golden opportunities, has cost shareholders and benefited Ansteel as it turned out.