finance announced, page-18

I must admit to being a bit puzzled by the euphoria on here. After all, most of the euphoria is coming those who were saying that CDU would only need minimal, if any, financing whilst those who were saying it would need large volumes (like $170m to $200m) were simply blasted.

And now the company finally announces that it has arranged a total of another AUD$127m (loan plus Sinosteel shares) which does not, according to the announcement, cover the port and rail facilities: and everyone is raving about how smart WM is! On the 1st March 2011 the Rocklands Project was costing $200m - 32 months later it is close to $400m. But WM is a financial genius? On the 1st March 2011 commercial production was forecast to start in late 2012 - now commissioning won't commence until August 2014 for full production in early 2015. But WM is the master miner?

Is it a good deal? It doesn't look like a bad deal for CDU. At first I thought that it certainly looked like a good deal for Minsheng, who could probably borrow 2yr USD at between 1.2% and 1.5% until I checked Minsheng's credit rating (BBB, http://www.ciratings.com/news/2013/03/14/974), so their borrowing costs would probably be closer to 4% to 5%. Not that the interest should be much of a concern for CDU anyway, it's not big dollars in the scheme of things.

Their main concern should be sticking to their commissioning schedule, something they have not been terribly successful with so far.