it is all down to the offtake agreement

On the SFR comparison thread mention was made of how smart the Chinese are, and how thoroughly they would have done their due diligence on Rocklands before investing $130m (or however much) in CDU.

I'm not sure how much the Chinese can do of their own DD. With the NCu, Rocklands is a unique deposit. You can't do any comparative analysis on a unique situation. So it comes down to looking at what CDU show and tell them, and making up their own minds as to how realistic the CDU data room is in portraying the deposit. To a certain extent, they obviously believe the CDU story, but, unlike other shareholders, they can minimise their risks with the offtake agreement (OA).

All we know of the OA is that COW have agreed to purchase a minimum of 60% of the Cu and all of the Fe/Co concentrates at prices linked to the LME; that CDU can sell the rest of the Cu to COW at spot; and that the agreement lasts for 20 years.

If the Chinese really are smart, they would have ensured that there was a commencement date for deliveries of the concentrates. After all, you don't want to commit $130m with no incentive for CDU to be producing. Perhaps something like commencing January 2013 (easily within CDU's declared timeframe) or twelve months after the ML is issued, whichever is the later.

Then, to eliminate any risk that the deposit isn't what it appears to be, in spite of all the effort CDU have put in to proving it up, a minimum delivery/month for the Cu would be a wise provision in the OA. After all, for COW, it is the copper that this is all about, not making a few bucks on the sp, or dividends. So if CDU are saying that they can produce 10,000T/month of Cu, the OA commits them to supplying a minimum of 6,000T/month at the price linked to the LME with anything else at spot. This insures COW against any mining, processing or transport problems CDU might have. And CDU have a margin for errors and problems.

But if, for any reason, CDU production can't meet delivery dates or volumes, then they would still be obligated under the OA to supply copper by buying on market.

How smart are the Chinese? Would you regard them as smart if they didn't have clauses like the above in the OA?

If everything WM tells us is correct, then it's a good deal all round (depending on what the price link to the LME is); but the OA gives the Chinese the opportunity to take out insurance against CDU exuberance.