Icon's ASX/Media Release dated 29 March 2011 opened with:"Icon...

Icon's ASX/Media Release dated 29 March 2011 opened with:

"Icon Energy Limited (Icon Energy, ASX:ICN) today signed a binding LNG Sales Agreement (LNG Supply Agreement) with Shantou Sinogas Energy Co., Ltd (Shantou SinoEnergy) in Shantou City in Guangdong Province in China to supply 40,000,000 tonnes of LNG over 20 years, subject to certain conditions precedent (refer to Background Information below)."

So! we have a binding LNG Sales Agreement for lots of tonnes of LNG "subject to certain conditions precedent" followed by a lot of hype about the agreement...nicely crafted by a master word-smith; reminds me a bit of the David Breeze (MMR) style.

then we have:

"Conditions Precedent"

"The LNG Sales Agreement includes the following conditions precedent:

(a) In favour of Shantou SinoEnergy (as the Buyer of LNG);

*Buyer obtaining any necessary import approvals by 31 March 2013 from Chinese Government Authorities to allow the construction and operation of the Receiving Facilities and the purchase and import by it of LNG under the LNG Sales
Agreement.

*Buyer delivering to Seller by 31 December 2012 the written certification of a Rating Agency specifying for Buyer a credit rating of AAA (where the Rating Agency is S&P) or Aaa (where the Rating Agency is Moodys)"

So! the Buyer can back out, or, perhaps, renegotiate the terms by not delivering either of the two 'conditions precedent' with Icon perhaps not knowing which way is up until January 1 2013.

Other conditions are mentioned under " In favour of Icon Energy (as the Seller)"

There is the rider stating:

"The conditions precedent are for the benefit of both parties and cannot be waived unilaterally."

which, to me, a layman, probably means that both parties have to agree to the Conditions Precedent; So, do the Chinese say to Icon "we do not have a credit rating available by 31 December 2012" and Icon have to agree with that proposition "No you do not" therefore the Chinese can back out at the last minute.

But, not to worry, Icon would have a stack of cash in their pockets from the CR's along the line by then and would be negotiating with others - Twiggy style as bigeye mentioned above.

The MOU (or Sales Agreement) seems to reflect the Icon/Beach written farm-in agreement - not worth the paper it is written on whereas a handshake agreement between people of integrity in the Western world or personal guanxi relationships in China could over-ride the loopholed written contract..

The current sp reflects the cynicism of investors.