this could end badly, page-26

kenso I think you are spot on with your views of the outlook for steel mills and iron ore mines in China. Ansteel would not have invested in magnetite in Australia if it thought it could do better at home (particularly with the extra shipping costs involved). They would have been well aware of the marginal costs of production of their domestic magnetite mines when they set down the assumptions for Karara. Karara won't be the first mine to shut come the next price shock in IO. The first casualties will be exploration, new project developments, mine expansions and marginal magnetite mines in China. Then we can start looking at the rest and working our way down the cost curve.

My intuition tells me that profitability will not be an issue for Karara and given the lack of actual cost data with which to work, any analysis is pure speculation (I'd rather trust my intuition).

The big problem for all of us is riding out the commissioning stage!!!

GBG has become impossible to invest in for institutions that are basically governed by the need to track the index, for better or for worse. This probably explains a lot of the sell down. Couple to this margin call selling by people who have used borrowed money to buy shares, and lots and lots of justifiable fear and we get to where we are today.

Only clear and unequivocal information to the market about the technical and financial state of mine will break the GBG share price fall. IMO it is not wise to put new money in until this happens. My intuition also tells me if an Ansteel take-over offer was in the wind it would have happened by now or be very close. I am however, fundamentally, not a believer in an Ansteel take-over offer. Debt restructures and GBG dilution more likely imo if things do get worse.

P.S the above should not be regarded in anyway as investment advice it is simply my opinion. Please do not rely on any of it. Do your own research or get professional advice to suit your specific investment needs.