Some thoughts about Rio's (Mr Ritchie) press statements.Firstly,...

Some thoughts about Rio's (Mr Ritchie) press statements.

Firstly, I doubt that Rio will be taking the advice of Extract directors about the CGNPC offer. Nice words to say, but this is merely avoiding real comment for the next month.

Secondly, if Rio wants to JV their Rossing mine and Husab, they will not sell their Extract shareholding without binding agreements being in place before selling. They may even increase their holding between now and March 1 to improve their bargaining position.

An article in The Australian this afternoon indicated that Rio and CGNPC were barred from discussing any JV until the Kalahari bid was closed, and stated further that CGNPC has moved to compulsory acquisition of the remaining shares.

If this information is correct, this would indicate that JV discussions could resume. I am guessing that these discussions would focus on what percentage ownership would reside in each entity, and what protection each party would have (parties may include Itochu as well) and what investment would be made by each to bring the mine to production.

One possible scenario leaves Extract as a listed company, the mine operated by Rio, with Rio investing the next tranche of money to bring the mine to operation in return for increased shareholding - say equal with CGNPC.

Another would be Rio signs binding operator agreements with CGNPC, and then sells their shareholding to CGNPC - to allow the privitization of Extract (Itochu would also want guarantees of supply before selling). I don't think this is Rio's style to be just an operator. I think they want to be in a position of some power.

So what happens if CGNPC does not increase their offer - and there are not enough sellers to get them over 50%?
Do we end up holding our shareholding, but seeing it diluted through the capital raising process - and a delay of three years before we see revenue?

So many options, not enough brain power to evaluate them all.