RE: Good but puzzling news20 Jul 2020 17:27
Evidently
When I read the RNS, it did seem a little strange to be involving China when the Angola facility provides an alternative route to market. Then the following thoughts came to my mind. The document agreed is some kind of heads of agreement. How binding it is may depend what was actually worded and being promised. Secondly , the Chinese are really good at building plant infrastructure and the company wants this built well and on time. Finding a company to do this is either Chinese or Canadian for rare elements if its out to subcontract. With this document published is anyone else going to provide all the building of the mine, the finance package and insurance cover if things go wrong. Some backs expect 9-10% interest repayment. I am not sure what the Chinese rate is and that is something we will learn about later on. The company has expressed a desire for a one stop shop for the whole lot.
Another factor is that China may well want to restrict rare metals exports as its own national market demand increases greatly for it and this simply limits the amount for other markets. Therefore they do not see it as such a competitive issues by supporting other rare metal producers and they may want a good relationship with Angola as well.
The share has gone up as the debt package and the future selling of Tanzania gold mine is likely to limit the extent of any placings on equity owners.
Hope those views help. Tony