Some will suggest that this argument is neither valid nor convincing.
Resource / reserves estimates are just that. They can be revised upward or downward in both quantity and quality. Look what happened to Lihir gold after they bought Ballarat gold at a premium. It a DUD ! They just dumped it. BHP Raventhrops was a stillborn after spending $2 Billion. Vaiability in mining is never a sure thing even when all the boxes are ticked.
The point is not whether the Chinese pay for what they get. Without their money, AXO may as well start selling cup cakes or pizza.
It doesn't look like AXO is negotiating from a position of strength in the information released (and not released) by the company. It doesn't appear there is much real competition in that Chinese mills are fighting to their deaths in order to get a slice of AXO. Perhaps there are things beyond the corporate powerpoint presentations and ABN Amro broker report that we don't know. What's the catch ?
Suppose if the SP takes a hammering. The 50% stake in the JV will cost much less for the Chinese partner.
AXO Price at posting:
26.0¢ Sentiment: None Disclosure: Held
