I used to make a living drafting agreements. If there was a an...

I used to make a living drafting agreements. If there was a an unreasonable objection, I would insert words that satisfied the person objecting, but which meant nothing. This is one reason why the PDY agreement interests me - professional curiosity.

I am sure the Oakajee project will eventually come to fruition, but when, and who will be the prime mover behind it is another matter. The WA Government will certainly need to play a significant catalytic role. High Fe-content Magnetite is desirable to China, because it is less polluting – however, it requires mine-site concentration, and this needs infrastructure and secure sources of reasonably priced energy, plus the exporting facilities (railway and a purpose built port). Geraldton harbour, which Karara Mines Limited (part owned by Gindalbie) now uses, cannot handle large volumes, and the Geraldton Port Authority views its iron-ore exporting facilities as a temporary facility that allows foundation customers for the intended Oakajee deep-water port to start mining and processing and to generate cash flow while they wait for the stalled Oakajee plan to get going – see:
http://www.parliament.wa.gov.au/publications/tabledpapers.nsf/displaypaper/3911113a10e9d7c726baf3c548257c150008fb60/$file/1113.pdf

On the matter of agreements and exit clauses, every agreement has termination provisions – e.g., in the case of a purpose-built railway and harbour, they would be subject to; finance; a Bankable Feasibility Study; agreements with other mining companies to use the export facility; long-term agreements with customers; regulatory approvals; land acquisitions; et cetera. Because the agreements that need to be put in place do not happen together, and some are impossible to negotiate without other agreements proceeding them, the first agreement is fraught with the risk of going nowhere. Investors are deemed to understand this risk.

On the matter of and scams, the borderline between scams and cavalier behaviour is elastic. When risky deals fail, aggrieved investors see it as a scam, and if it succeeds, they see it as confirmation of their investing astuteness, and the puppeteer who pulled the strings is much lionised. If directors of penny-dreadful exploration company can set up performance options at virtually no cost to themselves, and then use shareholders funds on a gamble from which they would make mega bucks if the gamble succeeds, that is a form of moral hazard that is normal behaviour in exchange-listed companies. Nobody goes to gaol for indulging in moral hazards.

The High Court found in October 2012 in the Twiggy Forester's case that although he and his company used the words “binding agreement”, the target readership of FMG's announcements should have been astute enough to realise that this was not the fact – there were exit provisions, as reasonably sophisticated investors should know. It is easy to affect the market with relative impunity by announcing a proviso-ridden agreement – many investors will read more into these announcements than the facts warrant, and the courts will not come to their rescue, unless other evidence suggests to the courts that manipulation was intended.

As an aside, the words in an agreement may not be the arbiter of a court's interpretation – the court may look to the purpose of the provision. All Commonwealth contracts have termination-at-will, or termination-for-convenience, provisions, which do not detail when they can be invoked, and similar provisions are mandated to cascade from the prime contractor to subcontractors. The option to exercise such provisions in inappropriate circumstances have been denied by the courts, because the unstated purpose of these provisions was to disallow contracts from overriding Parliamentary decisions. You would have to be a fairly fortunate subcontractor to know this defence, and my guess is that some simply read the words, and concede defeat. To misquote the Castrol slogan, “Agreements ain't agreements, Al.”