Posted on NOT board, post here for info.

goldhunter

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Hebe,

1. CLF: Amazing to see how fast this ship went down. The day low was $14.30/s for a Mkt Cap of $2.2B, a piddly amount compared the aquisition price of $4.9B for Consolidated Thompson alone. Point here is CLF plan for BT development (at ~$3.2B) is dead. CLF is broke, not sure if it can afford to pay out the $0.60/s dividend (~$100M total).

2. Divestiture: CLF has no choice but to divest. Its Canadian holdings include Consolidated Thompson and the RoF chromite resources for which it has spent ~$0.5B to acquire. Don't know how much it would get for each of the above, less than half price? Say, $200M (could be $300M) for chromite and $1B (or a bit more) for Consoldated Thompson. Just a wild guess for discussion purposes. Guess who would be interested in stainless steel (which would need Fe, Ni and/or Chrome).

3. Baosteel: It has ~10%NOT and can buy the entire CLF (but won't, since it would not stand a chance to get acceptance from the US government. So, it would probably go for bits and pieces such as the chromite and Fe in Canada (Consolidated Thompson). It has the money to do all this, but its strategy would be to get a minority stake (just below 50%) and let the Canadian companies (or a merged/joint company) to run the show while staying in the shadow to pull some strings (they want a secure and long-term supply of material at a reasonable price). RCF has ~20% NOT, but this fund (like Casablanca) is in this for the money. It will play the role of Kingmaker for just pure profit.

4. NOT and KWG in a JV arrangement: CLF bullying strategy of trying to hang and let the small company (KWG) twist in the wind has back-fired and blown in its face. A good lesson has been learned, and NOT and KWG would not want to go down a similar path. It would be of mutual benefit to work together and share the wealth, rather than spending times in court. It looks like the two companies have all the good ingredients (Ni, Chromite, transportation to get the ores out, and an economical process for chromite conversion using natural gas. Somehow the two companies will get together and work out some kind of cooperative arrangement.

5. BTW, CLF still has 14% of KWG through its Canadian subsidiary, so somebody may be interested in that portion of KWG to have a toehold?

6. Glencore and Vale: They might be silently watching the whole RoF (and Fe) thing like a hawk. They may want to become the operator of the consolidated chromite operations.

It's gonna be an exciting Summer (or latest, Fall)...It will unfold as it should.

goldhunter