re: the submission process
CAZALY RESOURCES LIMITED [CAZ] RIO TINTO PLC
Iron Ore News RelatedStory A rare case – Rio vs. Cazaly Cazaly scopes Shovelanna Investec backs Cazaly
Monday, November 14, 2005 WHAT the Minister giveth, the Minister can also taketh away. With apologies to readers with a religious leaning this is how Dryblower sees the immediate future for Rio Tinto in its dealings with the Western Australian Government. On one hand, State Development Minister, Alan Carpenter, is widely tipped to soon grant Rio Tinto a reduced royalty rate on diamonds mined at the Argyle project, a key step in Rio Tinto committing to a major underground development at Australia's only big diamond mine. On the other hand, the Minister is looking very likely to take away Rio Tinto's rights to the hotly disputed Shovelanna iron ore tenement. The first decision, which has been more than a year in coming, is the result of government learning that every mine, no matter how big or small, must stand on its own financial feet – even if the parent company is making obscene profits elsewhere. In Rio Tinto's case the big profits are flowing from its iron ore mines, with more tipped next year as haggling heats up over the possibility of yet another increase in the price of iron ore. Diamonds are a different story. Argyle's days as an openpit are numbered, and the company has been arguing that a 7.5% royalty is far too high for the underground phase of the mine. One of Rio Tinto's arguments is that the royalty on gold is only 2.5%, and it should be around that level for diamonds. Dryblower thinks that might be a step too far and can see a compromise being worked out with an underground diamond royalty of around 5%. As a sideline issue it will be interesting to see what happens to Kimberley Diamond which is running a series of small openpits at the Ellendale mine – will it get the same reduced diamond royalty likely to be applied to an underground mine? The smart money says yes to the Kimberley question because diamonds are diamonds, and apart from that who wants to spend the next five years in a legal battle with Kimberley chief executive, and legal eagle, Miles Kennedy. Once the diamond decision is made, perhaps as early as tomorrow, the question on Minister Carpenter's desk becomes iron ore – and whether or not he will grant dispensation to Rio Tinto, which appears to have botched the paperwork on the Shovelanna deposit. Dryblower's tip here is that Rio Tinto is headed for a loss, for several reasons. Firstly, because Rio Tinto has been sitting on Shovelanna for at least 16 years and done little in the way of exploration and/or development, which flies in the face of the use it, or lose it principals of WA mining law. Secondly, because Rio Tinto has been somewhat of a repeat offender when it comes to renewing the Shovelanna tenement. Thirdly, because Cazaly Resources is doing a damned fine job in demonstrating that it's serious about mining Shovelanna – and that's what mining law is all about. The release on Friday by Cazaly of a scoping study was probably the last straw for Rio Tinto because Minister Carpenter now has a clear-cut case of a tenement not being renewed in time, an allegation of money not being spent on the claim, and a development proposal from a rival applicant. Apart part from all that, and despite the two cases being totally separate, it is human nature that Carpenter will be thinking that after granting a lower Argyle royalty he can't give Rio Tinto everything it wants.
And, if that's not enough it should never be forgotten that Carpenter comes from a political party which views Rio Tinto as a class enemy, and what an excellent opportunity to give it a small blood nose – just for the one-off thrill in demonstrating who's boss.
" I can't find the article which claims that Carpenter and the Rio MD were on christmas holidays together"
Anyway thats a recap... sorry about the old articles..
CAZ Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
