The focus was wrong. The company spent up millions on an Indian deal and, unbeknownst until finally revealed at the "MPA" signing, the company had only secured two MOUs. From my understanding, somewhere these agreements also had exclusivity while negotiations were made. The agreement also had no financial retainer or break clause to compensate for time and money. It was difficult for holders to make this assessment until that far in because, everything was, "commercial in confidence".
I also wonder why planning was undertaken with nothing iron clad is beyond me and why it was described with rhetoric such as, "firm and formal". I think a lot of people would say is at odds with the sequence of events.
Further to that it was not the only business undertaken. Significant energy was spent on the ELF scheme and, while the ELF generated some decent money, all that money went up in smoke. This capital did not go into the upgrades that could have just as easily been planned and completed at the same time, even at a very slow pace. There was no need to have a cash burn of 4 million dollars in any year for a deal that fell over at the MOU stage.
I don't believe NMDC's media statement was face saving. As one of the often mentioned billion dollar national entities the company knows it conducts a huge amount of business on a daily basis. This company on the other hand currently has a market capitalisation of 4.8 million with limited liquidity on the market at half that price. I also stated that (several times but here is one example) that the Indians (including NMDC) would not likely be impressed with the company based on its performance
"... I hope the punters complete their Bacchus Marsh upgrades otherwise the Indians are going to be looking at some pathetic facility that outputs barely anything and generates zero revenue, not a glowing endorsement."
If the risk is so great and there are no precedents why did the company undertake the most risk prone way of conducting business? That is, spending all its money (on non-capital assets) before anything was properly finalised?
You certainly have spoken about upgrading BM several times and you're saying it wasn't a priority over India. I'm looking back into the past with exactly what I stated at the time, this is not reflective logic. I could post several examples but is thread effectively summated my feelings. Back then I was under the impression the company was raising millions for its BM upgrades.
All in all the company finds itself in exactly the position it was destined to be in, because it spent money on a deal that was not complete and because it lacked sensible frugality in pretty much all other areas.
ECT Price at posting:
0.2¢ Sentiment: None Disclosure: Not Held
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