As has been discussed on Hot Copper for some time, Kogi Iron...

As has been discussed on Hot Copper for some time, Kogi Iron needs a cornerstone investor committed to the company's future. UKWoody lined up such an entity (Reliance Rail) a few years ago but had the rug pulled from under him. (Given what has happened since, I'll bet Reliance is very happy the deal was axed.) That Kogi has been unable to secure a cornerstone investor is proof positive no iron ore producer, steel maker or prominent resources fund is in the slightest interested. Back in April, Kogi's board announced the arrival of Diversified Metal Holdings.LLC with a deal structured in a way to suggest perhaps a cornerstone investor (in for the long haul) had been found. No information about DMH was provided, prompting a lot of speculation about the entity's links, experience and true commitment. Kogi chose to provide no additional information.

Now it transpires DMH is a portfolio company of Bergen Asset Management - a fact some posters on Hot Copper appear to have been well aware of. In days past, another Bergen portfolio company invested in Kogi but the board chose not to bring that fact to the attention of shareholders. Why?

In the announcement which introduced DMH, Kogi invited shareholders to participate in a rights issue - on a basis that was decidedly less attractive than the deal offered to DMH, Very sensibly, most shareholders did not participate. I wonder if those who did participate would have done so if they had known DMH = Bergen. Perhaps they might like their money back?

For the life of me I cannot understand why anyone owns any shares in Kogi. Excluding the WA iron ore deal, in its present guise, Kogi has spent more than $65m to create what? What? Nothing that has been announced in the last 12 months suggests the next 12 months will bring good news. Yes, the steel billet project in Nigeria looks great on paper but the reality is the resource is challenging and the technology for producing a specification product has yet to be commercialised. As for the WA proposal; one of my friends with a long career in iron ore just laughed when I asked for his thoughts.

I can't imagine what the group of investors who associate with adelaideoval think of the investment. Perhaps they take comfort in the old joke: what's the definition of a long term investment? A short term investment which went bad." What's the score? Bought in at 20c and now 1.4c. Ouch. At what point will they realise that it's not working? And why do they think more of the same will produce a different result?