Here?s a thought:RIO holds 14.23% of EXT and a further 12.5%...

Here?s a thought:

RIO holds 14.23% of EXT and a further 12.5% stake in KAH; combined they have an effective holding of 19.6% in EXT.

Today's article in the Fin Review suggests the capex could be reduced by $700M in the event of a JV with RIO; however only 19.6% of that saving would flow to Rio under the current ownership structure; yet it would principally be RIO (who own 69% of Rossing) who would be providing the opportunity for EXT to realise this substantial capital cost saving.

So, if Rio owns 69% of Rossing, and there is a potential NPV improvement of $700M, the RIO?s effective contribution would be $483M; yet the benefit gained in relation to their EXT holding is only 19.6% of $700m = $137M.

Obviously, any JV would account for the above, but alternatively, to realise the full benefit of increasing the NPV through slashing the required capex, RIO could simply play their hand and perhaps get a "better deal" than they could otherwise get through a JV with EXT.

They did this when they bought North Ltd in 2000. Back then, North?s subsidiary Robe River Iron Ore was developing the West Angelas Iron Ore Project, and this was Rio?s target. Those with a long memory will remember North / Robe River applied unsuccessfully to the regulators for access to Rio's rail infrastructure. North/Robe were ultimately denied as RIO successfully put the case that the rail assets formed part of their process. North Ltd's West Angelas Project was ultimately approved by the North board at a cost of over $1b including a dedicate 300km rail link to the West Angelas mine. Within a matter of months, Rio bought out North with the sole purpose of grabbing the iron ore assets at West Angelas, only 40km from their rail line to RIO?s Yandi mine. RIO went on to develop the West Angelas mine at some $300m less than the original cost estimate and collected the same revenue stream as North would have collected from the ore.

The current situation is ringing a few bells with me as to the possibilities.