Transformational – Pros Part 3 Assets and conclusion

Continuing with pros and conclusions

3. Assets.
I’ll be interested to get Peppie’s comments in regard to the Tanzanian assets that Strandline bring to the table. To me they sound very interesting – they’ve managed to tie up a massive amount of exploration territory in a stable friendly country and the results so far are indicative of strong grades. It looks like there is a large valuable asset base there in roughly the same region as Base Resource’s Kwale deposit which is now shipping. Big blue sky potential here from what I can see.

This new asset base diversifies/balances our exposure to the various mineral sands products. In my opinion, assuming viability in Tanzania, it will also give the new entity insurance along the lines of Iluka’s ability to idle and speed up select deposits as suits market conditions. It’s encouraging to read that the resource targets appear to be able to be explored and delineated quickly and cheaply.

Apart from the Strandline Assets I think there is significant upside from this announcement for our existing assets.

a. Coburn.
As mentioned already, in totum these developments should increase our ability to get a deal done, if a deal can be done, through greater exposure to the mineral sands industry and supply chains. I do note though that the price is cutting Strandline in on the asset – not much of a pain at this point given it’s currently a stranded asset, they strengthen our prospect of getting it up and it will still be highly leverage to recovery in mineral sands prices

b Fowlers Bay.
A tit bit of very important information has slipped into this Strandline announcement and presentation. I’m very excited by the statement in the docs that GUN are currently in advanced farm out negotiations to explore Fowlers Bay. This is a seriously interesting site and with nickel prices being strong, blue sky speculative potential is ripe to be tested.

If the farm in completes, It’s fair to point out that Strandline aren’t offering anything here therefore they’d be getting a bit of a windfall. That’s part of the dilutive effect. The plus side is that having capital strengthens us for a farm in to be able to meet our commitments and thus mitigate potential future dilutions in the farm in. I’d prefer we weren’t sharing it off but on balance I think it’s definitely positive and I’m very keen to see Fowler’s Bay under way.

c. Mt Gunson.
Similar comments to Fowlers Bay. Strandline don’t contribute anything here and gain exposure to the upside however having capital will be valuable in progressing the Feasibility Studies. One possibility that comes to mind relates to Torrens and their recently mooting the possibility of going public. It seems to me that with plenty of capital we would have the option of contributing to Torren’s commitment in some way that gains us a share in them and bolsters the company’s position in the tenement.

4: Conclusion
As stated at the top, I’ll be supporting this direction and supporting the placement. I will be buying in the placement and I will also look to extract opportunity out of the marketplace if gives me a chance to leverage my position at minimal risk.

I think the deal is indeed transformational, underwrites our future and we’d be mad, as a company, not to run with a good opportunity when it brings in:
i. Capital
ii. Top quality personnel
iii. Very interesting assets
iv. And strengthens our capacity to exploit what we already have, especially improving our strength in negotiations.