G'day Kiwi,Well, for a start, when JOGMEC first got involved the...

G'day Kiwi,

Well, for a start, when JOGMEC first got involved the SP was probably double where it is now, therefore MC of nearer $20M than 10. Then there is the fact that JOGMEC is apparently a state-run enterprise involved in securing vital commodities for the nation. I gather the current 30% share of the project will later pass to an individual Japanese company. So up to this point a takeover bid has probably not been an option considered. I'm just thinking that once a preferred company is selected then that company may see good economics in full control, especially if the MC remains extremely low. Then again, someone else may see the benefits of the asset beforehand. If the Japanese government is as serious as it appears about acquiring tungsten security then one would think that barring a metal price collapse, which seems unlikely due to Chinese influence, then Watershed is definitely on the path to development. By how much the SP will rise if they reach production status in 2014 as planned is anyone's guess, though. Obviously there'll be plenty of dilution and debt if VML retains a 70% interest, but heck, from the current position of around 4c that still leaves plenty of scope for a good percentage increase. I'm sure anyone would be happy to buy BHP for $35 and sell a couple of years later for $70, so why wouldn't a few punters think 4c could become at least 8c, and most likely long before 2 years.

Overall, I've completely revised my recent negative views on VML which occurred to me after they announced the large rights issue. Having trimmed that back they have kept the dilution minimal for now and will likely get a better opportunity to raise again later in the year at a more favourable price post Watershed development announcements and Kollo JORC (however small).