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I posted this over the road the other day:

 

Hi Guys,

I have done some research and most of the previous articles refer to the Silicon Smelter costing $500 million. I also found a few other mentions of Silicon Smelters in other parts of the world coming in at around the same price.

I also think it is important to consider that Management want MHM to be a sole Al/Salt Slag play and therefore will not retain the state in the Silicon Co at the company level (IMO). As a result we as shareholders either A. Get shares in the new company or B. Receive a one off capital return (following the sale of the project).

Seeing as the project is already going to cost $500m I donÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t think the partner is going to want to pay MHM/MHM shareholders a large sum to take the project off our hands 100%. As a result we are left with option A. The company will be spun out and listed on the market (IMO).

So what could this mean?

- Seeing as MHM have done a lot of the ground work and held this project for a number of years I would expect that we would get a minimum of 20% (any less and I would be disappointed in management). - The company who comes in and acquires the project would most likely want 50% IMO as a Silicon project is not like a Gold Mine where you dig it up and sell the stuff to anyone. The company that builds the plant will also be the one using the end product.- That leaves 30% to be raised via an IPO, which MHM shareholders can participate in as well.

Seeing as our 20% stake is ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“freeÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ, i.e. we donÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t have to pay any more money as we already own MHM shares. Then the $500m must be raised by the Major Partner and IPO. This would mean the Major partner contributes 62.5% of the money or $312.5million and the IPO the remaining 37.5% or $187.5 million. (NOTE: This money may not be raised all in one go as I doubt they could get that much coin less all DA and environmental approvals were in place. As a result that may be the ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“end figureÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ a year or so down the track after another CR along the way).

That would then imply that our 20% stake is ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“worth $83 millionÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ. Calculated by taking $500m that it will cost to develop dividing by 120 (100 for the amount financed by other partners plus our 20% on top) to give a value relative to the projects total cost of $500m. (hope that makes sense ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ in other words of 20% is funded by others, but we still get the benefit).

Fully diluted MHM has 136,974,395 shares as a result our ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“impliedÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ value in the project is worth 60 cents per share. However, obviously the Silicon Co once listed wont trade at $500m, given that the Major Partner will probably fund a large proportion of their investment via debt, not equity.

Assuming they kick in $125m in equity (40% of their required $312.5m), plus the $187.5m in equity from the IPO that would give a Market Cap of $312.5 million. And our 20% would be worth $52 million on market or 37.9 cents per share. (Assuming that the company trades at 100% of the equity kicked in). In the real world it will probably trade at less than this, but for arguments sake lets run with the figures

I know it seems like a lot of money, especially when you consider that our share price is under $1. But if this project is to go ahead then there will be a number of announcements along the way that will significantly boost the SP. On top of that we have progress in America. If this was to get our Share Price to $2 then an in-spec distribution of shares in a new company at 37.9 cents (would obviously be rounded up or down to a round figure) would account to less than 20% of the SPÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s current value (0.379/$2). Which is definitely in the ballpark of possibilities IMO.

Anyway I just wanted to provide these figures to highlight the ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“potentialÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ value of the project based on ONE possible scenario. Obviously management and our eventual partner may have different ideas.

As always please do your own research. Also this deal still has some way to go and the figures are very rough as a result. As more details emerge we will be able to work out with a lot more accuracy what the likely outcome is to be.

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Plan for $500m super smelter

 

SUE NEALES

September 30, 2009 04:00am

A $500 MILLION silicon smelter to make the building blocks for solar panels may be built between Wynyard and Stanley.

 

Tasmanian Treasurer Michael Aird and Australia's senior trade commissioner to Germany met top executives from multinational chemical giant Wacker last week in Munich to discuss the project.

Under the proposal, Wacker Chemie Ag would build a silicon refinery at the Port Latta industrial site near Stanley, next to the existing Grange Resources iron magnetite pellet plant.

 

The plant would be the biggest silicon refinery in Australia, producing a much more sophisticated silicon metal product than the other major refinery in Western Australia.

 

Tasmania is attractive to Wacker -- one of the world's largest specialist silicon companies -- because of its rich untapped reserves of high grade 99 per cent pure silica, water for cooling, renewable energy from both wind and hydro-electric sources and natural gas to power its high-temperature furnaces.

 

Circular Head mayor Daryl Quilliam confirmed yesterday Wacker representatives had visited the region "two or three times" recently to canvass their silicon project with locals.

 

He said council staff had met with Wacker to discuss its key needs in building a new hi-tech silicon refinery at Port Latta.

 

"Wacker has talked with the council. Our reaction is that any development like this is very important to us and that we will do whatever we can to make sure we get this refinery project for Circular Head," Mr Quilliam said.

 

Mr Quilliam said discussions had focused on getting the silica from the Marrawah and Arthur River area, where it would be mined, to the proposed Port Latta smelter using existing road and rail options.

 

The proposed refinery would turn high-grade silica into pure silicon.

 

The thin sheets of polysilicon wafers produced would be exported to be made into photovoltaic cells to supply the fast-growing demand for solar energy panels in China and Asia.

 

Refined silicon can also be used in the Liquid Crystal Display (LCD) screens of computers and TVs, in the manufacture of fibre-optic cables to carry high-speed broadband telecommunications and to make silicon chips that power computers.

 

Mr Aird, who spent $50,000 last week on a taxpayer-funded trip to Europe to talk to the Wacker board, has said the project would provide "hundreds of jobs".

 

He refused to discuss the project yesterday, despite being asked to confirm in Parliament that his mystery "manufacturing plant" mooted for the North-West Coast was a silicon mine and refinery.

 

He said discussions between the Government and the unnamed company were still "very sensitive", with the proponent still looking at two other locations.

 

"There are commercial-in-confidence reasons for the company not wanting to canvass the issues at this stage," Mr Aird said.

 

Greens leader Nick McKim had asked Mr Aird to confirm the "open secret" that the foreign investment project was a silicon refinery. Mr McKim demanded to know if a value-adding manufacturing plant would be part of any industrial smelter.

 

He also asked what incentives the Government was promising Wacker, if heavily discounted electricity prices were part of the package and where the timber needed in the chemical process to convert silica to silicon using charcoal was to be sourced.

 

"This may well be a good project which Tasmanians can be proud of, but can you provide an assurance that this will not be yet another divisive proposal which will rip the Tasmanian community apart, as Gunns Limited's pulp mill has," Mr McKim asked.

 

Wacker wants the Tasmanian and Australia governments to provide it with incentives before it makes a final decision.

 

Mr Aird met last week with federal Industry Minister Kim Carr in Melbourne to discuss a support package.

 

He said federal and state assistance would focus on the provision of infrastructure such as roads, rail and port facilities, and on skills training.

 

http://www.themercury.com.au/article/2009/...mania-news.html

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I have read that article previously.

 

There was also another one that was published more recently that quoted the same figure.

 

I also read another article about an overseas silicon smelter where the proposed cost was just over $500m. I cant seem to find the article on google now so ill have to kep digging for it.

 

 

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Hi Matt,

 

It is Brazil Farming, a QLD cotton company (I think) in Brookstead.

 

Name BRAZIL FARMING PTY. LTD. ACN 009 903 771 ABN 29 009 903 771 Type Australian Proprietary Company, Limited By Shares Registration Date 02/08/1973 Next Review Date 02/08/2012 Status Registered Locality of Registered Office Brookstead QLD 4364 Jurisdiction Australian Securities & Investments Commission

 

They turn up in various company registers, not sure if much can be read in to their buying or not.

 

Cheers Charles

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