sydney roadshow, page-14

Thanks for asking the questions Boff. Sadly no direct answer as to why they restructured the deal the way they did other than because that is what ECE wanted. The 51% required to get finance is complete BS. We all agree on that point. Anyway, onto bigger and more recent events.

I was called out on the BDO thing the other day and you refer back to it in todays post. I didn't respond to that the other day because I thought it better to wait for the document to arrive and give them the benefit of the doubt. My original comment was a little sarcastic and I saw no point defending it until I had read the document in full. Last night I finally recieved the documentation in the mail and sadly I think its a compete croc. Is it just me or is the document not worth the paper it was printed on ?

Okay so I know its a big document and many haven't bothered reading it so I'll make it easy demonstrate what a poor excuse for a case this document represents and give you page numbers to help wade through this confusing document. All of the following comments relate to the BDO "independant experts report".

Be careful if using the index at the start of the document to find the BDO report. The index says it is on page 28 but if you go to page 28 you will get the "Directors Recommendation". I'm firmly of the opinion that the directors aren't independant at all so its a bit worrying that they point you to the directors opinion as an "Independant Experts Report". You will find the BDO report starting after page 38 but don't worry things don't get any clearer when you get there !

(1) If anybody wants to go to page 2 (use page numbers at the bottom) of the independant experts report you will notice that it doesn't actually exist. The document goes straight from page 1 to page 3 on the reverse side.

While I don't actually care about the page numbers it is the critical sections that is missing that concerns me. Section 2.2 (opinion) begins at the end of page 1 but we don't actually have the rest of that opinion. It just stops mid sentance.

Section 2.3 is completely missing and when you turn the page we see it starts with section 2.4. As this is all on the same physical page I know my report isn't just missing a page.

So we don't actually have a full opinion to read or consider as the majority of it is missing from the report. Probably a printing issue but still not a great start as I suspect the company has failed to meet its legal obligations to provide shareholders with this report. An incomplete report is not a report and I assume this is going to cost us money and cause further delays.

(2) Check out the Niobium chart in section 7.1. Notice that the chart shows prices and supply of FeNb between the years 2000 and 2007. Not sure if they noticed but we are in 2011. How long have they been preparing this report or did they just pull out an old one and update a few bits here and there? What possible legitimate reason could they have to present us a 4 year old price chart ? Also why do they talk about historic prices for Brazilian ferro-niobium them suddenly change to quoting a recent spot price for Chinese "60-B" ?

(3) Check out section 7.2 and they have done the same thing except worse with regard to Tantalum. The sentance at the bottom of page 16 says "The charts below set out the world production and the world demand for Tantalum over the past 10 years". Not only is there only one chart that follows (not charts as per their statement) but the chart goes from the year 1997 to 2007. It isn't a 10 year chart as they claim it to be. It doesn't cover the last 10 years as they state it does. It isn't even remotely current as once again it inexplicably stops in 2007. Please tell me this isn't an old 2007 report poorly rehacked ?

(4) Section 7.3 makes for interesting reading because supposedly "The nuclear energy industry is currently enjoying a revitalisation". Nuff said but I'll chalk that one up to bad timing. It is interesting however that they managed to produce an upto date chart in this section for uranium prices. That chart predicts pretty flat pricing whereas charts that would have shown healthy price rises for other commodities were mysteriously cut short by several years as per comments above.

(5) Section 7.4 acknowledges that the Chinese govt have implemented a 15% "scarcity tax" on flurite and recognises that China already controls the majority of global supply. Interesting the authors of the report have chosen to completely avoid any discussion of fluorite pricing. No out of date charts, no price charts at all in fact. After talking about pricing of each commodity in the preceding sections in detail why is it that there is absolutely no mention of price in this important commodity given that they themselves acknowledge that China is imposing export restrictions ? How can any reasonable person completely skip over this ?

(6) Rare Earth Elements - No price chart here despite skyrocketing prices. Lots of waffle about what appears to be irrelevant rare earths but no mention about the critical heavy ones such as Dysprosium that GBE management have reported to us on many times. They did nowever see fit to include aglobal rare earth oxide production chart which shows us what happened in the latter past of the last century. Again no explanation why the last decade of data mysteriously failed to make it into their report. 11 year old data is apparently good enough for GBE shareholders.

(7) Check out section 9.1 on page 26 whereby they try and give us a valuation. Notice they give virtually no value whatsoever so any of our assets other than Kanyika. Better still they ironically give some small valuation to the uranium project at Livingstonia but despite recent rare earth findings at other projects and skyrocketing prices these are given virtually no value at all.

(8) They assess a market price including control premium on page 29. Having reviewed the control preiums paid across the industry in recent years and provided an industry average of 51.36% for Australian mining companies in 2010, somehow they conclude that GBE shareholders only deserve a 30-35% premium. They offer no explanation why Global shareholder should expect significantly less than average.

(9) In order to explain away their conclusion that the proposal is "reasonable" they appear to seek to include the recent share price collapse which occured subsequent to the proposal being announced. In explaining their logic they compare us with our supposed indurstry peers like Lynas and show that out price has significantly underperformed vs other such companies (see page 32).

Their explanation for GBEs underperforming vs its peers between October and February is "Globe's peer companies experienced major de-risking and growth events that resulted in positive revaluations". Damned interesting conclusion given that share price of Arafura at the beginning and end of the quoted period was unchanged as shown on their chart. Derisking obviously means "aren't being taken over cheaply with management support". Is it only me that finds it interesting that a supposedly professional company like BDO completely fails to see any link between a 40% drop in GBEs share price and the offer itself ? Staggering yet this is part of their justification for their conclusions ?

More insulting still they go on to say "we believe the factors described would indicate that Globe's share price is depressed by issued relating to funding for the Kanyilka Niobrium Project BFS, high level of market uncertainty around the ability of the project to eventually move into production phase and stable world Ferro-nuibium price". No mention of the price dropping by more than 40% immediately after announcing the underpriced proposal to give away more than half our company at a 40% price discount along with almost total control. No mention that the first proposal was even lower.

(10) Check out their version of "advantages". They say "Globe may also recieve increased analyst coverage which may lead to a revaluation of Globe shares and an increase in liquidity in the trading of the shares". I can't believe that even they believe that statement let alone had the gall to present it as an advantage to existing shareholders.

Firstly how many analysts line up to cover a stock which is largely a subsidiary of a Chinese govt controlled entity which has no operations in Australia and has a small number of domestic shareholders ? The additional shares issued to ECE arn't going to create additional liquidity because they arn't available to be traded. The only additional liquidity will be short term and will most likely be a result of existing shareholders running for the door.


(*)

Lets face it this is just the obvious stuff that is wrong with this report. A more detailed read and you find bucket loads more. This is a report paid for with our funds to convince us to hand over control of our company for a price that these prople themselves state is unfair. They only manage to justify the "but reasonable" bit on the end by saying that they are not aware of any superior offers. The fact that the board have decided to peddle this offer and not seek or present any others surely is insufficient to reach the conclusion of "reasonable". Nothing else contained herein says its reasonable.

The report is incomplete with entire sections missing. Critical data is out of date by as much as a decade and they seem to completely skip over details which support a higher price. It appears that this is a 2007 report which has been dusted off and presented to us shall shareholder who in Boffdiggers own quote from our board "they don't really care about anyway".

I'm sickened by this. I'm sure anybody else who reads it would be too. We are being trated like idiots and I think its time to make an issue of it.