WITH just over a week until the creditors meeting, the outcome of which will determine whether the community's rescue bid has worked, contributors have deposited almost $120,000 - but more is needed.
A second $50,000 deposit has since been made to whet the creditors' appetites.
The majority of the mum and dad investors have come from Gladstone, with some supporters coming from as far as the Northern Territory, Western Australia and Tasmania with messages including "wishing you all the best in your venture" and "here's hoping all goes well and this long-awaited project can finally get under way".
To be confident of persuading the creditors to vote for the community's proposal another $300,000 - fully refundable if the creditors vote down the community proposal - needs to be raised by the end of March.
Minimum contributions of $100 to the Boulder Steel rescue fund can be sent to:
- Dedicated account name: Paul Sundstrom
- BSB: 064705, Account number: 10432061
- Personal details: Please put as much of the last name of the person, or organisation, who will be the shareholder into the "account description" or similar, and send a separate email or fax with the full name, address, contact phone number, and email address to firstname.lastname@example.org, or fax to 4979 0210.
Boulder Steel rescue: Q&A with Paul Sundstrom
How can it make sense to build a steel mill in Australia with our high labour costs?
Australian operating labour is less than 10% of the total operating costs of the GSPP, and the advantages of doing it in Australia far outweigh this, along with the higher construction costs.
The GSPP will produce 5mtpa of steel, requiring 8mtpa of iron ore and 4mtpa of coking coal.
Australia has abundant resources of iron ore and coal, and the GSPP will be well located close to the source of coal, meaning it can be railed direct to site.
Significant quantities of limestone will also be used and the quarry will be near Mt Larcom, with minimal freight costs.
Gladstone has excellent harbour facilities, well suited for iron ore receipt, and for slab and billet exports.
Aside from this, China no longer allows a new steel mill to be built in China, unless it replaces an old (polluting) one.
Also, Japan no longer allows coking ovens to be built in Japan, and one of the likely JV partners is very interested in building a much larger coking facility in conjunction with the GSPP, and exporting coke to Japan, whereas currently it is the coking coal itself that is exported, which means another value-added product.
Do we have to fully pay out the current Boulder creditors?
The short answer is no.
Our proposal to the administrator, as almost certainly will other proposals, will only offer part payment to the creditors, and if accepted, that becomes firm and final.
There are currently about $830K in creditors, which would be reduced during the administrator's validation process.
How will this be rolled out?
The first step is to gain control of the company.
We hope to retain the services of the two remaining Boulder workers, project manager Ross Johnson and CEO David Simpson, who will then operate in a minimum fit-for-purpose overhead environment to complete the EIS, finalise the agreements with the JV partners, and oversee a Share Purchase Plan to raise $20million on the open share market, at an anticipated share price around 10cents.
This money will be used to design the rest of the facility, outside the main steel-making equipment supplied by the JV partners, and to mobilise and staff-up for the commencement of construction.
Once construction commences, the $370million free carry, referred to in the previous Q&A, becomes useable as collateral to borrow from regular lenders such as banks, to complete the plant, and begin to receive income from the equity in the plant, and at this time we would be anticipating a share price around 40cents.