these are the words of Mark Earley
"C @ Limited (�gCEO�h) is pleased to announce it has entered into a binding and exclusive
agreement with an international coal developer that has a significant position in the coking
and thermal coal industry in Mongolia."
CEO has made a non�]refundable payment of US$100,000 as consideration for entering into
the option agreement, which will be credited against the total acquisition price.
If CEO exercises its option to acquire the coal licences, completion will occur once the parties
have negotiated and signed a sale and purchase agreement and CEO has made the final
consideration payment of US$7.7 million.
Well if you think about this, if they let the options Lapse then their loss if $100,000 BUT the upside POTENTIAL will mean re-rating of the Company.
Furthermore the options are near existing infrastructure and near the Chinese Border(being our biggest trading partner). Furthermore they will not be imposed with MRRT or Carbon Tax.
Thus Overhead cost of production is extremely minimal considering the proxmity of the coal deposits. As per my previous articles outlined in WSJ, there is approx 6.3Billion tones of coking coal in South Gobi.
Also if you use simple Option Value Theorey, the Options are in the money and are being exercised thus legitmacy of the further acqusition.
Hope that answers your question.
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