takeover rumors at the moment, page-12

Siberia, finding a billion tonnes of magnetite is like falling out of bed. It is literally as easy as getting a magnetic anomaly map and pegging the most intense magnetism, then drilling.

Ridley is probably one of the top 3 magnetite deposits in Australia, coming in at #3 - the others being FXR's MT Oscar, and AXO's Balla Balla. Ridley has an excellent head grade of 38% Fe. But...please look at the magnetite industry (such as it is) in detail before claiming anything is "world class".

The only thing world class about the magnetite explorers/developers is the size f the debts they will have to take on in order to get the mills built which can turn 3 tonnes of re into a tonne of product - albeit a product at +68% Fe. But so what?

Ridley is AGO's supposed cash cow. Flannagan et al are like kids with ADD - quick bucks, in and out, short mine lives, rape and pillage. They are not interested in investing, just knocking the tops off a few hills in the Pilbara and quitting the board at the top so they can lock in a few maseratis. Ridley requires a hell of a lot of comitment, not just flogging it off. CFE managed it, which was a miracle for Tony Sage, but it was one of those peak-of-the-boom deals which only one person ever manages to pull off.

Who has the $500M asking price Flannagan et al. want? The Chinese? And why pay $500M when you have to back in another $1.2 to $1.6 billion? If I was bankrolling the whole thing I'd want to partner Atlas, not just buy it off them.

Its an immature way of dealing with this asset, in my opinion, and reflects tellingly on the longevity of Atlas. So you have 27Mt of DSO, and if you get to your 5Mtpa rate, youve run dry of reserves in 3 years, placing a huge strain on your ability to drill up fresh reserves. Stumble, and you are out of business. It also means you can't give off a fat divvie stream because you need to continually preserve cash for future reserve drilling which will always be running desperately ahead of digging.

So, as far as I can see it, AGO hasn't got the vision, time, or patience to extract anything from Ridley and no one right now is going to sink $2Bn into it. Not when they have RDI/ARH, GBG, GRR, MIS, etc etc, who have all got commitment to their projects.