Advanced Explorations Inc. ADEXF

RE: RE: RE: RE: More on Scale

[greenandgold]

"Your last statement says it all...the largest cast iron producing company in the world (xinxing) does not have the capital to build the mine....honestly, stop insulting all of us (well most of us) on this board."
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It's important to look at the XinXing Pipes deal in the context of the kinds of investments other Chinese steelmakers have made in other mines around the world. What's XinXing really done? It's made a relatively small initial investment in a joint venture with AXI to gain control over an iron ore reserve. This satisfies the Chinese government's mandate to steel companies to obtain independent reserves, and to decrease reliance on the Big 3.
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Is XinXing going to front the whole cost of capex for Roche Bay, which will certainly be in the multi-billions, from its own cash reserves? Not likely! This is not how Chinese steelmakers do business. When they've invested in mines in recent years they've been paying for a portion of initial capex, and signing offtake agreements, in order to attract additional partners and additional financing to pay for the balance of capex. 
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An example: Wuhan gives $240 million to Consolidated Thompson, and signs offtake agreements, which helps Consolidated raise the balance of capex, $700 million, from other partners and financing arrangements. This spreads risk amoung many parties. If XinXing wanted to build Roche Bay by itself, it would buy AXI outright, take it private, and build the mine and take 100% of the offtake and the profits.
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What makes me skeptical of XinXing: 1) The small size of their initial investment compared to investments by other Chinese steelmakers in Canadian mines. Wuhan gave $240 million to Consolidated Thompson and $120 million to Adriana Resources. Money talks. 2) This is XinXing's first deal, there's no track record for what kind of partner they're going to be. Baosteel, Wuhan, Anshan and other Chinese steelmakers have made numerous deals in recent years and have helped build many economic mines around the globe.