1, the offer is fair valueResource Compare:UCL:Sandpiper ->...

1, the offer is fair value

Resource Compare:

UCL:
Sandpiper -> 1.97b x 42.5% = 950mt

MAK:
Sandpiper -> 1.97b x 42.5% = 950mt
Wonarah -> 1552Mt
Total = 2500mt

MAK
* 230mil share
* 14mil cash ( worth 45mil share)
* value = 230 - 45 = 185 mil
* 2500mt resource
* resource value = 2500/185 = 13.5 tonne per share

UCL
* 80mil share
* 2mil cash (worth 6 mil share)
* value = 80-6 = 76 mil
* 950mt resource
* resource value = 950/76=12.5 tonnes per share

So how fair is 10 UCL share for 9 MAK share ?

10x UCL share = 10x12.5 = 125 tonnes
9x MAK share = 9x13.5 = 121 tonnes

2, Both project are world class with similar value

Project Compare:

Sandpiper
* RAW material, price unstable
* 200 mil CAPEX
* Possible 100mil from project debt (debt is hard)
* UCL pay 42.5mil
* MAK pay 42.5mil
* Tungeni pay 15mil
* DFS in March 2012
* Production after 1.5 years (may delay by funding)

Wonorah:
* Final product, stable price.
* 2000 mil CAPEX (1.7b, but real cost may higher)
* JV Partner will cover project cost.
* DFS in 2013 (1.5 years later)
* Production 2 years after DFS (fund by JV partner)


3, Reduce dilution risk for UCL

First, UCL keep saying accept offer will dilute from 42.5% to 20%, this is not 100% true, because UCL will trade 42.5% Sandpiper to 20% of Sandpiper PLUS 20% of Wonorah

UCL:
* capital = ~20mil
* need to raise 42.5mil cash
* massive dilution (300% dilution)
* fail to raise 42.5mil

MAK:
* Capital = ~65 mil
* 14mil cash + 15 mil Haverstock + 20mil NMDC = 49mil
* Enough cash for Sandpiper

UCL+ MAK merged:
* Capital = 20 + 65 = 85mil
* Cash = ~50mil
* Need 75mil for Sandpiper (42.5% + 42.5% = 75%)
* CR need = 25mil (only need 25mil 1 year later)
* 30% dilution base on today price
* 10-15% dilution if price double after 1 year
* not delay on Sandpiper funding !