ARH 0.00% 0.5¢ australasian resources limited

I have no real opinion other than my high level thoughts on this...

  1. uio
    293 Posts.
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    I have no real opinion other than my high level thoughts on this stock. Have looked at it briefly and chose to stay out.

    I asked myself why so many Chinese parties had taken a look and backed out, despite Chinese involvement in the Sino project. Why Palmer had vended in only a "right to mine" and not sold tenure. Why despite constant inferrals of a right to "share" infrastructure, there was no detail released around which assets exactly can be shared.

    Also Palmer is far from the richest man in Australia. Claims to have 160bt of resource are premature if they cannot be economically extracted. His modus operandi is to sell stakes rather than develop projects. Buyers are starting to realise this.

    There is no guarantee that if a partner funding this project will get cheap offtake. There is no certainty around opex let alone capex. With iron ore tipped to inflect into over supply around 2013, you may end up with a worthless offtake contract because you can buy on-market cheaper. This is a myth that is often mindlessly regurgitated - if your ore costs more to extract than you can buy on market you put the mine into care and maintenance. This hasn't happened so far in iron ore because it's been mainly hematite - different game for magnetite projects.

    Just my opinion - if this was a credible project rather than a real estate flip, you'd see a better calibre of Director involved.
 
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