RE: ExSudburyGuy2 Was Right...rastaman1,
Like you, I am a supporter of Gary. There is absolutely no doubt that Gary had no choice but to accept the Jilin Jien bailout - the other option was insolvency. The deal negotiated by Jilin Jien was not unreasonable under the circumstances, and was more beneficial than any other company offered - which is a test of its fairness. There are risks and realities involved for a minority shareholder when a majority owner has options such as conversion of debt or preferred shares. There has been public indication that Jilin Jien approved of the plan proposed by Gary for debt retirement and preferred share redemption. I would be more comfortable with Gary at the helm for a number of reasons, and one would be the assurance that he would have been more inspired to represent minority shareholders' interests than any replacement CEO. Circumstances may develop where more dilution is the only rational approach. Dilution is not always a negative thing. Just as the initial dilution when JJ took control was more beneficial than the alternative insolvency - it may be that dilution required to set up an equity structure for growth would be beneficial to shareholders. Having a smaller percentage of a larger pie can be preferable to a larger percentage of a company that is not exploiting its potential.
Now to your concern that Jilin Jien could price the product to their benefit, thereby benefitting by gaining 100% of the below market price, while only losing 51% in profit share. If such a strategy was available, I doubt that JJ would risk the loss of respect, political implications etc., as it is their stated goal to develop a growing public company in Canada. Regardless, this strategy is not available. There are security regulations to protect minority shareholders from such flagrant abuse. But the most effective deterrent is that they are not allowed to remove nickel concentrate from Canada. Others have suggested that JJ would take the approach you have outlined - bashers like JohnEStrommJr, aatozz/doingthejob and trailorparkboy/rocksolid have risked libel actions to say that it was Jilin Jien's intention to rape the company in this fashion. ExSudburyGuy2, who I think might rate as a critic rather than a bashing nutcase, has also suggested this reason for Jilin Jien not caring about profit. I think there are a number of reasons that have been put forth that support that these suggestions are simply not rational.
I have pasted excerpts of my mid November response to ExSudburyGuy2 on the topic; I would point out that neither ExSudburyGuy2 or anyone else has presented evidence that would refute my contention:
Your most recent explanation stated "Liberty has been paying much of their debt to JJ in nickel concentrate. So they do get the commodity directly from Liberty. And that's what they want. Which is why they don't care if they make money...."
The fact is that at the time Jilin Jien acquired control and until September 15, 2009, Liberty was under care and maintenance. From September 15, 2009 through September 30, 2009 (and I presume to this date) all nickel concentrate produced by Liberty has been shipped and sold to Xstrata - as reported in the MD&A disclosure for those periods. You are therefore incorrect in stating that Liberty has been paying much of their debt to JJ in Ni concentrate (since they acquired control) and you are wrong that they get the commodity directly from Liberty.
As I knew your hypothesis to be based on incorrect information, I disagreed with your hypothesis, for that reason.
I also disagree, because as indicated in the information you pasted, the Mining Act requires that processing through to the refined product must be done in Canada. As Liberty produces only concentrate, it cannot send the nickel directly to Jilin Jien after expiry of the permit next week. As well, Jilin Jien's control position does not give it the right to benefit, to the detriment of minority shareholders, by acquiring the commodity directly or indirectly at prices under fair market.