Suggests everyone to have another listen to the BRR...

Suggests everyone to have another listen to the BRR interview.

It’s worth noting that GC’s response to the very first question in the interview has IMO given a lot away in terms of we can expect in the metrics associated with the off take and asset equity buy-in. The latter is intrinsically linked to the former.

GC stated that he is very pleased with the quality as well as headline numbers of the received EPC submissions being aligned with expectation. This tells me quite a bit.

The non-Chinese bidders (I would suggests there is more than 1 camp) have taken note of the fact that China has paid $2.5B for 40% of a low-grade magnetite asset in Tonkolili (with no pivotal importance to regional/provincial consolidation or the subject of international competitive bid. Rather than being a tier-1 asset, it’s a 15 MTA operations already having failed and penalized for not meeting Shandong’s off take contractual commitments).

That cold hard cash (approved by the NDRC with cheque issued by the CDB) paid for a mere 40% of a resource of little strategic consequence is ALREADY 9 TIMES the current valuation of Sundance (being the subject of the first ever multi-lateral international tender for a read-to-go high-grade IO resource in Africa). Go figure.

As the biggest elephant in the room (LOL), the non-Chinese bidders also know VERY WELL why China had to ditch the Hanlong bid with a very public global announcement of SOE assuming control 4 months before the mysterious disappearance of Liu Han. For this reason, they also know any bid will have as it’s baseline the original China-Only 57c bid factored for huge de-risking factors of received mining permits / conventions, and massive increase in DSO and itabirite resource.

If China is to secure SDL decisively, she has to attach a hefty premium putting it beyond reach of the next competitor to ensure that margin of safety. The whole world knows China came off badly in the destocking blunder with the NDRC throwing a tantrum at RIO, BHP when IO spot price shot from $80/T to $160/T in no time. With no ownership of anything tangible, China has once again exposed her vulnerability (that despite being the biggest IO customer globall), he has ZERO say in IO pricing and no leverage in pricing negotiations.

All this is not helped by China spending billions in rubbish low-grade ore from Mexico (so much so the state media complained about the ore posing a hazard to their steel mills and incurring additional costs in the steel making process). But worst of all, it exposes China’s desperation in her having to now deal with another cartel: The Mexican drug cartel in order to scrap a few more million tons of additional imports.

It’s all looking very good I think.