Sumich in the SMH:"''I have 8 million shares, so I have more to...

Sumich in the SMH:
"''I have 8 million shares, so I have more to win or lose out of this than others,'' he says, adding that his investment horizon is medium term, and not that of a day trader."

Don't cry Mark. I'm sure you'll get your thirty pieces of silver from ECE...

http://www.smh.com.au/business/jumping-the-gun-as-gunns-sets-out-to-see-green-20110303-1bgcq.html

Circling the Globe
GLOBE Metals and Mining executive chairman Mark Sumich might find himself on the end of a few rough questions early next month when he asks shareholders to give up control of their company just as it seems to be kicking exploration goals.

Sumich signed a deal with the state-owned East China Mineral Exploration and Development Bureau (ECE) in mid-November to get $41 million of funding for the Kanyika niobium project in central Malawi.

The price was giving the Chinese group 51 per cent of the company and board control at 34.5? a share for a helping hand in getting the rare metals project to market - most of that market being Chinese steel producers who need the niobium.

Some Globe investors were unimpressed with the pricing, given that the shares had been trading between 40? and 45? before the deal. At least part of that price strength came from China's decision last October to clamp down on exports of rare earths - a market in which it controls 95 per cent of production. Although the ban was quickly repealed, the search for rare earths supplies outside of China has been stepped up - as has the value of prospects and the interest of sovereign nations in finding alternate sources of supply.

ASX-listed Lynas Corp discovered a couple of years back, when the government dissuaded a Chinese takeover, that politicians were already keenly aware of the situation. Lynas's Mt Weld deposit is world class, and even without a takeover the company's market worth is more than $3 billion.

Some investors in Globe clearly hoped that was the path that it was on, too - and it may still get there, but existing investors will be heavily diluted.

Sumich argues that Globe was always going to have to raise funds by issuing shares, and that the discount would have been steeper through a conventional rights offering backed by a stockbroker or investment bank.

''I have 8 million shares, so I have more to win or lose out of this than others,'' he says, adding that his investment horizon is medium term, and not that of a day trader.

He also reckons the ECE deal was struck on the niobium property, which is rare metals, as distinct from the 80 per cent stake in the Machinga rare earths prospect in southern Malawi that Globe is earning by funding exploration - and which has produced strong exploration results since the ECE deal was struck.

That was probably what gave Sumich the strength to wrestle ECE into agreeing this week to pay 40.5? for each of the 118 million Globe shares it plans to buy - increasing the money raised to almost $48 million. Sumich says that, apart from last year's price spike on the back of China's choking off rare earth exports, Globe shares have not traded at 40? since mid-2008.

Whether that extra $7 million or so is a fair reflection of what control of Globe is now worth, and enough to appease disgruntled investors, ought to be revealed in the experts' reports due to be released this time next week.

The Foreign Investment Review Board has already approved the ECE deal.