Chapter 381: A Whole Afternoon of Approvals!
Fred and Alice had come specifically—not for the Chapleau gold project—but as the two most critical executives of United Win Mining. Given the solemnity of their visit, it was clear they were here for significant business regarding United Win Mining.
After bidding farewell to Mark, they returned to the hotel. They didn't use the hotel's meeting room; instead, they sat down comfortably in the living room of Li Tang's suite.
"2006 is a deeply memorable year for us at United Win Mining! It could even be called the dawn of a new era for our commercial empire!" Fred began passionately, his usual enthusiasm unmistakable. "Most importantly, United Win Mining has turned a profit this year!"
It had been five years since Li Tang acquired United Win Mining back in 2002. To successfully develop the iron ore deposits, over 100 million Australian dollars had been spent during the initial exploration stage. The results had been excellent, revealing iron ore reserves of over 2.3 billion tonnes.
Moreover, United Win Mining had the foresight to recognize the Pilbara region's true potential. At a time when iron ore prices were depressed, and the global mining and investment communities were pessimistic, they boldly took control of a vast, barren area spanning 50,000 square kilometers. Looking back and considering the future, this vast land ownership was clearly invaluable.
Though United Win Mining hadn't conducted further exploration since discovering the Kitchi and Shura iron ore deposits, it was common knowledge that beneath their enormous holdings in the Pilbara, countless other iron ore deposits were waiting to be discovered.
The Pilbara was undeniably the world's largest iron ore production region, and United Win Mining controlled a large portion of it.
Now, when global mining giants like Rio Tinto and BHP Billiton sought to expand their mining rights in the Pilbara, they realized that the formerly vacant land was already spoken for. In short, the future of United Win Mining held limitless potential.
But what truly worried competitors was that United Win Mining wasn't merely using sensationalism to exploit the stock market—it was genuinely committed to business. With an investment exceeding 300 million Australian dollars, they successfully developed the Kitchi iron ore mine, shipping out ten million tonnes of ore in their very first year.
And now, they'd achieved profitability!
This meant the company was undeniably successful and on a rapid upward trajectory—a frightening competitor indeed.
"How much profit did we make?" Li Tang asked calmly.
Fred, brimming with excitement, answered eagerly, "Excluding previous investment costs and focusing purely on our revenue and production costs this year, our net profit is approximately 50 million U.S. dollars!" He looked at Li Tang expectantly, craving his approval more than anything. Praise from Li Tang would undoubtedly be the highest honor he could receive.
"Fifty million?" Li Tang paused thoughtfully, considering the figure modest relative to United Win Mining's market value, which had reached over four billion Australian dollars. Compared to the one hundred million U.S. dollars earned from the recent Chapleau gold project alone, 50 million seemed modest indeed.
Yet, considering the difficulties and pressures United Win Mining had faced—constant skepticism from the industry and relentless obstacles—achieving profitability was significant proof that their strategy was correct.
Running a successful mining business was notoriously challenging; failures were common, and fortunes could vanish overnight. Developing a large-scale mine typically took five to ten years of arduous work. Any success, no matter how modest at first, was a huge victory.
For United Win Mining, while 50 million dollars wasn't an enormous amount, their future earning potential was limitless. If they could eventually ramp up annual iron ore production to 100 million tonnes, annual profits in the billions would become a reality.
Such potential was exactly why global investors were chasing after their stock.
"We did it!" Li Tang smiled warmly at Fred and Alice. "You're both leading a truly great company, and guiding it to even greater heights!"
Fred's face immediately broke into a delighted grin, finally hearing the praise he longed for. He laughed heartily, "Even if this year's profit isn't huge, United Win Mining has undeniably become a major global mining powerhouse!"
"You both did extremely well," Li Tang assured Fred and Alice sincerely. Then he asked, "What are your plans for this year's profit?"
"We've just turned a profit; we can't immediately distribute large bonuses," Alice stated matter-of-factly, her demeanor typically calm and authoritative.
Fred chuckled, glanced toward Alice, and explained, "Before we came, we discussed this matter thoroughly. We agree that these profits should be reinvested into the company."
"What can we do with 50 million dollars anyway?" Li Tang asked, almost rhetorically. "Just leave it in the company's account as operating capital."
He then turned toward Fred, gently praising him, "Your management team has worked tirelessly—daily meetings, constant small decisions every three to five days, major decisions every fortnight—pushing the mining operation forward efficiently and systematically. Without your hard work, the mines wouldn't be operational, we wouldn't have achieved profitability, nor would this success be possible."
Fred smiled modestly, learning humility over his years working for Li Tang. "That's simply our responsibility," he said humbly.
"Under normal circumstances, you and the management team deserve substantial bonuses. Furthermore, as stipulated in your contract, your team holds 9% stock options. While those options haven't fully vested yet, if we were to pay dividends, your team would normally receive 9%," Li Tang explained apologetically. "However, if we distributed the entire profit now, it wouldn't be healthy for the company's operations."
"I understand completely," Fred assured sincerely. "The team I brought here isn't shortsighted. They aren't here for immediate gains. Had they prioritized money, they would have left long ago. For years, they've received nothing more than basic salaries—far below what they'd earn working elsewhere."
"You're truly the founding heroes of United Win Mining," Li Tang praised sincerely.
"Our dream is for United Win Mining to grow into one of the greatest mining giants in the world!" Fred declared ambitiously. "When that day comes, our rewards will be a hundred or even a thousand times greater!"
"Absolutely!" Li Tang agreed wholeheartedly.
Alice remained composed, accustomed to Fred's ambitious rhetoric. Calmly, she interjected, "Achieving profitability is undoubtedly a company milestone, but it doesn't eliminate our financial pressures moving forward."
"Go ahead," Li Tang prompted patiently.
"So far, our total investment in iron ore projects has reached approximately 3.4 billion Australian dollars," Alice explained seriously, as the company chairman deeply familiar with finances. "Apart from the 500 million dollars from Lucatti International Group and the iron ore prepayments from several Chinese steel companies, over two billion Australian dollars came from loans!"
Alice clearly hadn't let current successes blind her; she fully understood the looming financial challenges.
"These loans have various repayment schedules. Starting next year, large repayments will come due annually. Some years we'll owe 300-500 million Australian dollars; other years, repayments will spike to a billion dollars or more!"
Li Tang nodded approvingly. He felt relieved knowing Alice had maintained clear-headed vigilance amidst external optimism. Internally, the team wasn't complacent; they remained realistic about the looming challenges.
Alice continued calmly, "Over the next few years, United Win Mining will consistently face massive financial pressures. Profitability is great news, but we must remain cautious. Any disruption to our profitability could cause severe financial instability!"
Li Tang acknowledged her concerns but remained confident. He knew the iron ore market wouldn't collapse suddenly in the next couple of years. If their existing operations reached full capacity—producing forty to fifty million tonnes annually—they'd easily generate hundreds of millions of dollars each year, mitigating repayment concerns.
"I trust Fred's management capabilities. He'll handle any financial risks effectively," Li Tang said reassuringly.
Fred, naturally confident, remained unfazed by Alice's warnings. From his perspective, everything was manageable. He even began contemplating ambitious expansions: "Boss, I believe it's time to initiate the second phase of our construction plans."
According to their initial plan, the first mine should have begun production by the end of 2005, but delays pushed the actual operation back several months. With the first mine now operational and profitable, the company was poised to launch the second phase—expanding overall iron ore production capacity to 100 million tonnes annually by developing the Kitchi Iron Ore's second major mine, the "Corn Mine."
Fred was eager to proceed quickly, as completion of the three-stage plan was required for his team's stock options to fully vest. Expanding operations—and leveraging debt to fuel growth—had always been his trademark style.
Alice, however, strongly disagreed, cautioning, "Our existing loan obligations are already considerable. Further expansion financed by heavy debt will significantly exacerbate our financial pressures."
She looked earnestly at Li Tang, concern evident in her eyes. "Even minor market volatility or business setbacks could lead to severe financial distress. Excessive borrowing at this point could destroy everything we've carefully built."
"Destroy," in this context, meant bankruptcy. Many once-prominent mining giants had collapsed precisely because of cash flow crises. As chairman—and Li Tang's trusted eyes within United Win Mining—Alice felt compelled to voice her sincere reservations, even at the risk of conflict with Fred and internal tension within the company.
Li Tang knew that Fred and Alice had developed a severe disagreement regarding the company's future development strategy. Before meeting him, they had probably already argued. If not managed well, this could lead to the formation of two opposing factions within United Win Mining's senior management. For the rapidly growing company, this could spell an even greater disaster.
It was commonly said that even the strongest fortress was easiest breached from within. They had managed external turmoil and attacks confidently, but had never encountered such a serious internal crisis. How to handle this was undoubtedly a challenging issue.
Li Tang glanced at Alice and then at Fred, noticing they were both staring intently into his eyes. It was clear his attitude could drastically affect the mindset of his two most trusted executives.
Personally, this was a tricky problem for him.
After contemplating for a long moment, he finally said slowly, "I support Fred's plan. After all, the three-phase mine development strategy was our initial, long-established goal."
"But—" Alice anxiously interrupted.
"Let me finish first," Li Tang stopped her argument, fully understanding Alice's concerns.
Deep down, he actually trusted Alice more. If he were forced to abandon one of these two capable executives, he would choose Alice without hesitation. However, for United Win Mining, the situation wasn't so simple.
The company had proven over time that Fred's aggressive, risk-taking management style was an essential component of their success. Directly vetoing Fred's ideas and ambitions now would be equivalent to rejecting the company's core growth strategy, dampening Fred's passion and ambition. In the short term, that outcome was something United Win Mining could ill afford.
He turned toward Fred, noting the seriousness in his expression. "United Win Mining will continue to follow the growth strategy we've previously set, advancing quickly and decisively to secure a dominant position in the iron ore industry. But, as Alice has pointed out, we must acknowledge our financial pressures and the potential risks of a funding crisis."
"With the current iron ore market, we will continue making profits and keep increasing those profits!" Fred firmly believed this.
"Yes," Li Tang nodded in agreement.
There was no doubt that the iron ore price hikes over the past several years had given companies and individuals enormous confidence—as if this beautiful dream would never end. Indeed, it wasn't just a dream; it was reality. He understood global optimism in the mining industry and recognized that many experts boldly predicted iron ore prices would continue to rise next year due to sustained demand from China's steel industry.
Seizing this opportunity to scale up would indeed make financing easier and profits greater, exactly aligning with Fred's ideas. Missing out on such a prime opportunity would make it hard to expand later.
But as someone with foresight, Li Tang saw the future trajectory of the mining and financial markets clearer than anyone else.
"We'll continue investing funds to start the second-phase construction plan," Li Tang affirmed to Fred. This undoubtedly bolstered Fred's confidence and gave him firm support.
However, Li Tang then adjusted his tone, "But we can't keep relying on large-scale loans or debt issuance. Debt financing does preserve our equity and allows us greater profits later, but as Alice mentioned, when risks emerge, even a slight storm could bring a heavy blow."
The so-called risk wasn't just empty speculation. It was now early 2007, and the global financial crisis of 2008 was looming on the horizon.
In the devastating global financial storm ahead, even the world's second-largest mining giant, Rio Tinto, teetered on the brink of collapse, nearly disappearing from the global mining landscape.
As a rising star, United Win Mining wouldn't be spared from the storm. Though they wouldn't go bankrupt—in fact, the company's bold early investments allowed them to reap substantial profits when iron ore prices surged again—they would pay a heavy price. To repay debts during the crisis, the company would be forced to sell essential infrastructure such as power plants, desalination plants, pipelines, and other valuable assets, even nearly selling off their railways and ports. This was truly cutting away flesh from bone, leaving painful scars that increased their operating costs significantly in later years.
Fortunately, the crisis would be severe yet short-lived. Soon afterward, iron ore prices would rise again dramatically, rescuing many mining companies, including United Win Mining.
Fred nodded thoughtfully. "We can keep discussing specific financing methods."
"No more major borrowing or bond issuance," Li Tang stated firmly. Though he disliked having his equity diluted, targeted strategies were necessary to survive the impending financial crisis and to profit significantly when the iron ore market rebounded afterward.
"No loans or bonds at all?" Fred asked, somewhat surprised. "A mixed financing strategy might better achieve our goals. This round of financing won't be small!"
"Even if the financing process takes longer and our second-phase construction slows down, we absolutely cannot increase our debt significantly anymore!" Li Tang spoke unusually strongly, issuing a rare direct instruction to Fred. "If we must borrow, then extend loan terms significantly—at least three years, preferably five or even ten years. Even if the interest rates are higher, we must insist on longer repayment terms."
Many loans typically required annual repayments. Accumulating new debt atop existing obligations right as the financial crisis erupted would spell disaster.
Fred didn't fully grasp Li Tang's underlying reasoning, but faced with Li Tang's unusually explicit orders, he paused momentarily, then nodded respectfully. "Alright, boss, I trust your judgment."
Deep down, Fred had already developed immense respect for Li Tang. Having weathered countless storms himself, Fred rarely felt such genuine admiration for someone. However, in recent years, Li Tang's consistently visionary decisions had left him thoroughly impressed.
After addressing Fred, Li Tang turned to Alice, trying to explain his thinking. "United Win Mining's rapid growth can't stall, but your warnings about our financial pressures are completely accurate…"
"You don't need to explain!" Alice's voice was tinged with unmistakable disappointment and frustration.
Li Tang gazed silently at her. Usually, their eyes would naturally meet, and he'd see passion and confidence reflected back. But today, she clearly avoided his gaze. It was evident that his unwavering support for Fred's aggressive strategy had deeply hurt her.
"Meeting adjourned!" he concluded without further elaboration.
"Dinner together tonight?" Fred's face flushed with cheer as he left with the others.
"Alice, stay behind," Li Tang called softly.
Alice had been leading the group toward the door. Upon hearing his words, she paused, waiting until everyone else left. Standing with her back turned, she silently conveyed her disappointment in Li Tang's apparent lack of trust.
"Close the door and lock it," Li Tang instructed calmly.
Alice hesitated, then obeyed, locking the door before turning around to glare at him angrily. "What do you want to say?"
"Your concerns were completely correct," Li Tang began earnestly. "Fred is excellent at opening new territory, but he overlooks the risks looming on the horizon. He's charging forward recklessly, unaware of the dark clouds gathering and the storm that's about to strike!"
Alice scoffed coldly, clearly not accepting Li Tang's explanation. "Yet you still publicly rejected my view and openly backed Fred's risky strategy, without reservation! You completely disregarded my dignity! In front of everyone, you humiliated me!"
Indeed, aside from Alice and Fred, most senior executives and even a supervisory board member had been present earlier.
"Was it really that bad?" Li Tang asked gently, feeling he had been somewhat diplomatic and hadn't intended to personally contradict Alice.
"Now everyone in the company, including the board and shareholders, knows Fred has your full trust, not me!" Alice snapped irritably, her usually immaculate golden hair disheveled like an agitated cat. "Before, everyone saw me as your representative within the company. Now that's no longer true!"
She was genuinely furious and deeply wounded.
Li Tang had always treated Alice as a trusted executive without considering their gender dynamics too deeply. Yet, witnessing her distress now filled him with genuine regret.
"I clearly miscalculated on this issue," Li Tang admitted softly. "Let me make it up to you. Whatever you want as compensation, I'll give you."
"Anything?" Alice's tone abruptly softened, like ice melting under sudden sunlight.
"Yes!" Li Tang promised firmly. "Next time you and Fred disagree, I'll sign your proposal immediately—without hesitation."
"Those details aren't important," Alice's eyes now shimmered playfully.
"Then what is?" Li Tang asked, sensing a change in the atmosphere.
"The compensation," Alice stared intently at him, her voice suddenly warm and inviting.
"Yes, compensation," Li Tang repeated slowly. "What exactly do you want?"
"You know what I want!" Alice suddenly tore open the bow at her collar and forcefully ripped open her shirt, abruptly transforming the room's mood into something intensely charged and unpredictable.
Li Tang stood frozen, his mind blank.
Again? This was the second time Alice had cornered him like this.
The previous time, Dai Yingchi's knock on his office door had fortuitously interrupted her attempt. But now, locked securely in his hotel suite with thick soundproofing, escape seemed impossible.
"What are you doing?" Li Tang stammered nervously.
Alice's face drew close, eyes ablaze, whispering, "Weren't you just offering your approvals? Let me give you mine."
Before Li Tang could fully process her words, he was thoroughly overwhelmed.
He spent the entire afternoon "approving"!
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