Blythefan, the debt will be about $1.20 per share based on a $1.230 billion loan taken out by the JV. However you should consider the difficulty of obtaining such a large amount of finance, espicially in the current climate. IMO the debt adds significant value to GBG, and the only real risk will be the contract prices of iron ore and EPA.
Your arguement about the cash being used for mining is valid, however its EXACTLY what they want them to use it for. I'm happy they ordered 70 million worth of long equipment, arn't you? Would you prefer it to sit in a term deposit and fund exploration/admin expenses?
Ansteel is the key force behind GBG, and will ensure its success. Ansteel one of the largest steel producers in China, and its growth depends on Karara coming online. Maybe Gmghag should look into Ansteel, and how expensive their magnetite is to mine in China.
GBG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
