"besides the uncertainty on a realistic valuation, do you think that to some extent future value which should be available to shareholders is being forward sold as equity deals over cash ? "
Feng - Obviously its in the public domain that Oceanwide has secured a 20 year off-take for 60% of the Rocklands copper concentrate. At the time of the initial deal they took placements at $4 and $3.80 - They were supposed to take 30% of the company and they obtained FIRB approval to do so, but in the end they reneged on the last tranche.
Presumably their Lawyers were clever enough to secure the off-take deal on the original placement and there was no penalty to them for reneging.
It does seem a little out of kilter now that O.W have an off-take and the larger Chinese shareholder NAAIL doesn't - As for forward equity being sold down I would expect that there is a discount linked to the off-take LME price.
Commercial confidentiality will probably mean we will not know the full terms of the agreement but I do remember hearing CDU will be paid FOB Townsville and not when the concentrate comes out the smelter in China which appears to be the norm.
CDU needs more cash and they have signalled numerous times they will raise it via equity placements. While Im happy not to have the Banks involved its a pity the debt funding option that was initially offered in the MOU with Sinosteel and a similar debt funding offer from Oceanwide now seem to be off the radar.
I expect at some point in time a placement will be done that includes the final 40% off-take and I think sinosteel will also continue to take stock in lieu of cash.
All my own thoughts of course and Im only guessing like everyone else.
Cheers Hoot
CDU Price at posting:
$4.49 Sentiment: None Disclosure: Not Held