Chapter 179: Acquired for Eight Million USD
As the conversation continued, scattered fragments of Li Tang's memory began to piece themselves together.
If he remembered correctly, BHP-Billiton had actually agreed to a 2% profit royalty with Fernando's Ivanhoe, not a royalty on gross sales—which made a world of difference.
One is calculated from total sales revenue, the other from net profit—an enormous distinction!
After acquiring the exploration license, Fernando had conducted drilling and announced a major find in the first year. To remove that 2% profit royalty clause, he had to pay nearly 40 million USD—more than 300 million yuan!
Li Tang suspected Fernando had deeply regretted agreeing to BHP-Billiton's royalty clause back then.
Before Li Tang could come up with a strategy, Alice, acting as the financial advisor, made the first move in negotiations:
"According to our research, your total exploration investment in Mongolia over the past four years was just 3 million USD. Asking for 10 million USD as compensation seems excessive."
"Hm?" Goris looked at Alice in surprise.
He didn't know where she had gotten that figure—but it was surprisingly accurate.
Even Miles was startled. Clearly, Alice had somehow learned of the internal financial details of their Mongolian subsidiary. It was almost unbelievable.
Alice didn't need to provide evidence. But she had clearly done her homework.
"I agree that BHP-Billiton invested considerable effort and achieved meaningful results in Mongolia. Compensation is warranted. But in my view, 3.5 million USD is a more reasonable amount."
Goris had a hard time arguing with that—it was a well-structured and grounded argument.
He smiled and countered, "You can't just look at capital investment. We also invested in personnel, logistics, infrastructure—things that don't show up in the cash flow."
"I agree with Mr. Goris' point."
Alice didn't press the issue further. Her role was advisory—her job was to lay out the case. It was up to her client to negotiate the actual numbers.
She shifted the focus to BHP-Billiton's second condition:
"As for the 5% royalty on future production, I believe that's unreasonably high—almost hostile."
"I mean no hostility," Goris quickly defended. "Our company has worked with China for over a century, always with mutual respect. We value our relationship with China and have fond memories of working with Wukuang Group. I think Mr. Hu would agree. So please don't accuse us unfairly."
"Perhaps I chose my words too harshly," Alice replied calmly, undeterred by the accusation.
"But I believe the royalty clause was modeled after Hancock and Rio Tinto's arrangement. Even now, Hancock Exploration still earns 2.5% of annual sales from the Hamersley iron mine—the largest in Australia."
"That's no secret," Goris replied with a chuckle. "In our industry, this arrangement is common. It protects the rights of those who make the discovery."
"But before Rio Tinto developed Hamersley, that mine had already been confirmed to contain billions of tons of iron ore. It was a proven treasure."
Alice reasoned smoothly, "By contrast, the license under Nanhuang Resources hasn't even begun serious exploration. For a license in such an early stage, a 5% royalty clause is unjustified. As I said earlier, it feels like a punitive demand."
Having said her piece, Alice stepped back. She wasn't going to haggle the number down herself—that wasn't her role.
Now it was up to Li Tang and his team.
This girl's tongue was sharper than a blade.
Goris didn't seem offended, though. Instead, he looked at Alice with a hint of amusement. "You're not Chinese, are you?"
"I'm American," Alice said smoothly. "But right now, I work for Wukuang Group."
"So you've chosen to work for China. That's… bold," Goris replied. His tone sounded like praise, but there was something else beneath it.
He addressed Alice's argument: "You make good points. But you can't deny the value of that Mongolian license. If it didn't have potential, you wouldn't be here, and we wouldn't be talking."
"You drilled 23 holes and hit ore in only two," Li Tang finally chimed in, backing Alice up. "That's a poor result. If there's no viable deposit, we'll lose everything. That 5% royalty would be meaningless. Mr. CEO, I know you're already planning to abandon the license. You've stopped funding it."
Miles pushed back. "We haven't abandoned it. We're just reallocating focus. We have no current plans to invest further in Mongolia."
Hu Zhenchi had been listening quietly, still as a mountain. Now, he finally spoke:
"We understand the situation. Given our long-standing relationship, let's both take a step back. How about this—Wukuang Group will offer you 4 million USD. Let's forget about the royalty clause. It only complicates things."
He looked at Goris like an old friend.
"We do hundreds of millions in trade annually, especially in iron ore. Why complicate things over a few million?"
He made it sound like negotiating over a few million was petty.
And from BHP-Billiton's perspective—a company worth over 130 billion—that was probably true.
But Wukuang couldn't be so casual. Four million USD was over 30 million yuan, and any internal funding of that size needed board approval.
"Four million is too low," Goris said, shaking his head.
"Then raise it a little?" Hu remained calm.
It was all a performance.
Yes, BHP's profit margins made the amount negligible.
But for Wukuang, four million USD was a serious investment.
"Five million," Goris countered, sensing goodwill.
"Deal!" Hu Zhenchi sighed in relief.
That number wasn't much higher than the maximum they had planned for—well within the acceptable range.
"But about the royalty clause… 5% isn't that high," Goris tried to revisit the topic.
"Didn't we agree to skip that mess?" Hu tried to sidestep it again.
But Goris wasn't letting it go.
Li Tang stepped in firmly, "We can't accept any royalty clause—5%, 2.5%, or otherwise. Remove it, and we'll increase our cash offer."
Goris looked at him, puzzled and slightly annoyed.
The young man—likely a secretary—had no business speaking at this level.
But Li Tang stood firm.
Clearly, this wasn't just any kid.
Hu hurried to explain, "This is Li Tang—an exceptional geologist in China."
"Some leader's son?" Goris asked mockingly. He didn't recognize Li Tang but knew in China, you never knew who had backing.
"Not exactly," Hu replied vaguely, then tried to steer the topic back. "Honestly, the 5% royalty is too much. How about 2.5%, like Alice suggested—"
Before he could finish, he felt someone tugging on his sleeve.
He looked down and saw Li Tang's hand.
Glancing into his eyes, Hu couldn't read what Li Tang was thinking—but the message was clear.
Li Tang didn't want any royalty clause at all.
Reading the room, Hu made a decision.
"We can't agree to any royalty clause. But we're willing to increase the cash offer."
Goris studied the young man carefully now. He realized—this wasn't just a side player.
This was someone with real weight in the delegation.
"Alright. We'll add one million," Li Tang said, wincing as if in physical pain. "That's our best offer."
"One million more? That's too low," Goris sighed.
He wasn't thrilled about haggling with a kid—it felt beneath him.
"Add three million, or let's drop it altogether."
He was getting impatient.
There was too much on his plate with the ongoing merger, and this minor deal wasn't worth the time.
He hadn't even wanted to personally handle it—but exploration deals fell under his direct responsibility.
This was his final offer.
"Deal!" Li Tang reached out his hand eagerly.
Goris didn't shake it. Instead, he raised an eyebrow at Hu.
"Hu, do you accept the terms? Eight million USD, no royalty clause."
"Of course. May our friendship last forever," Hu replied after a brief pause, casting a side glance at Li Tang but not objecting.
"I have other business to attend to, so I won't keep you."
Goris waved dismissively, then instructed Miles:
"Prepare the legal contract for them."
Miles watched the CEO leave, wanting to say something.
He had been the one to propose the royalty clause.
But Goris clearly didn't see much value in the license.
Had it been up to Miles, he would never have dropped the clause.
But orders were orders.
From there, the cooperation went smoothly.
The contract was signed, and the payment terms were finalized.
In just three days, the deal was done.
And with that—
the mission was accomplished.
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