SDL - Sundance Resources

[skc]

While I think the board of this company would have run SDL into the ground (no pun intended), how was there only a 10% chance of it being reached? Other than the fact I have already anwered the question.

Sorry the 10% was just to illustrate the uncertainty. I should have said X% where X is somewhere between 1-100. The buy/hold/sell decision stems from that for each trader...

 

[notting]

Stock code is FKU. However, possibly your dyslexia is preventing you from reading a cogent sentence. Thats OK, you keep playing SDL and making your $2000 and I will take, quite literally the many truck loads of cash I made and go buy 'elsewhere'.

You could have just said BMN 50%

 

[FreshTrader]

Stock code is FKU. However, possibly your dyslexia is preventing you from reading a cogent sentence. Thats OK, you keep playing SDL and making your $2000 and I will take, quite literally the many truck loads of cash I made and go buy 'elsewhere'.

I'm sorry, there doesn't seem to be a company on list with the code "FKU", perhaps you spelt it wrong?

There's no need to get nasty mate, take your "truck load of money" and buy a set of manners. Neither of us meant to upset you.

 

[mystockview]

I'm sorry, there doesn't seem to be a company on list with the code "FKU", perhaps you spelt it wrong?

There's no need to get nasty mate, take your "truck load of money" and buy a set of manners. Neither of us meant to upset you.

Well as my interest in this stock no longer exists, as I say I have my money, I will part this thread with these thoughts.

Upset? Not in the least. There is a difference between attempting (or trying) to make a point, my point, yet a point all the same which valid in your enlightened eyes or not is one which deserves like any posting you make a form of respect.

It would seem that with your infinite knowledge of the market you believe that trying to be witty or humorous, of which you are neither, you dont have to make any valid - in your eyes - response. Thats my point, not being upset.

 

[FreshTrader]

Well as my interest in this stock no longer exists, as I say I have my money, I will part this thread with these thoughts.

Upset? Not in the least. There is a difference between attempting (or trying) to make a point, my point, yet a point all the same which valid in your enlightened eyes or not is one which deserves like any posting you make a form of respect.

It would seem that with your infinite knowledge of the market you believe that trying to be witty or humorous, of which you are neither, you dont have to make any valid - in your eyes - response. Thats my point, not being upset.

My friend, I never attempted to be witty or humorous, I don't know where you pulled that from. I don't think I disrespected your post at all, rather the opposite, your point of view almost convinced me to sell out of SDL. However, as I said, it's the right choice for me to hold. I don't have in infinite knowledge of the market, thus why I joined this forum, to learn. I'm sorry if it came across that I was trying to be "humorous" (although I don't know how you could have come to this conclusion), I was simply offering my point of view, which I would have expect to have been met with equal respect. 25% return is pretty damn decent in my eyes, as I AM less experienced, unlike yourself who intends to make a 33.33% return on BHP.
Good luck to you sir. I apologise sincerly if I caused you any grief.

 

[CarbonSteel]

Well that was all very interesting but of no value to me. Does anybody care that we are being sold out at 43c below EV? Anybody at all? You are just going to lie down and let these directors run over you? They are stealing from us!

 

[FreshTrader]

Well that was all very interesting but of no value to me. Does anybody care that we are being sold out at 43c below EV? Anybody at all? You are just going to lie down and let these directors run over you? They are stealing from us!

My apologies in advance for asking what probably seems like a stupid question, but how do I calculate EV (I'm assuming it means Enterprise Value)??? I use CommSec as my trading platform and couldn't find this price indicator in the research section. Any help in pointing me in the right direction would be much appreciated. Thanks.

 

[CarbonSteel]

My apologies in advance for asking what probably seems like a stupid question, but how do I calculate EV (I'm assuming it means Enterprise Value)??? I use CommSec as my trading platform and couldn't find this price indicator in the research section. Any help in pointing me in the right direction would be much appreciated. Thanks.

I only know the actual market sale price method. This can be divided by the tonnage to get a value/tonne.

If you go back about 2 years in the sdl forum there were some posts which quoted these values. I do remember one comparable sale in Brazil which would have given sdl an EV of ~ $1. Hope this helps.

 

[FreshTrader]

I only know the actual market sale price method. This can be divided by the tonnage to get a value/tonne.

If you go back about 2 years in the sdl forum there were some posts which quoted these values. I do remember one comparable sale in Brazil which would have given sdl an EV of ~ $1. Hope this helps.

Tonnage? Sorry I'm not quite sure I understand. Where do I obtain this tonnage value from?

In response to your query, if the offer price was not accepted or it the offer was cancelled for whatever reason, what kind of price would you expect these shares to reach within 10 months? Just curious. I'm assuming you intended to hold for a relatively extended period of time. Let's say... in 3 years time where do you predict these shares to be at?

Thanks for the help Carbon.

 

[CarbonSteel]

Tonnage? Sorry I'm not quite sure I understand. Where do I obtain this tonnage value from?

In response to your query, if the offer price was not accepted or it the offer was cancelled for whatever reason, what kind of price would you expect these shares to reach within 10 months? Just curious. I'm assuming you intended to hold for a relatively extended period of time. Let's say... in 3 years time where do you predict these shares to be at?

Thanks for the help Carbon.

Tonnage is from their proven resource. Look at any of their presentations. I think it is about 2.3B tonnes. If held for 3 yrs, I would think they should be in the region of $2 - 3. However, this is no longer an option because the wise directors have decided to maximise their own situation rather than that of the SH's. IE by the sale to Hanlong which we are bound to honour if more than 90% (apparently) of SH's approve this sale. I will not be one of them. Hope this helps.

 

[FreshTrader]

Tonnage is from their proven resource. Look at any of their presentations. I think it is about 2.3B tonnes. If held for 3 yrs, I would think they should be in the region of $2 - 3. However, this is no longer an option because the wise directors have decided to maximise their own situation rather than that of the SH's. IE by the sale to Hanlong which we are bound to honour if more than 90% (apparently) of SH's approve this sale. I will not be one of them. Hope this helps.

Well $2 - $3 in 3 years time sure sounds a hell of alot better than the current offer, but that's if these 'wise' directors are able to run the company efficiently and effectively over that period rather than make rash decisions like accepting Hanlong's bid price. So effectively, you're hoping that the offer gets knocked back by the majority of shareholders and we continue to hold out for greater returns.

I don't like the fact that the current share price fell today...

 

[CarbonSteel]

Well $2 - $3 in 3 years time sure sounds a hell of alot better than the current offer, but that's if these 'wise' directors are able to run the company efficiently and effectively over that period rather than make rash decisions like accepting Hanlong's bid price. So effectively, you're hoping that the offer gets knocked back by the majority of shareholders and we continue to hold out for greater returns.

I don't like the fact that the current share price fell today...

And the SP will not get much better until time passes and the "wonderful" deal these directors have made begins to look like it is set in concrete. There is a lot that can go wrong and hopefully it will. These directors have sold us out, no doubt about it. I really think they have desecrated the graves of the originals, despite their cry of "doing it all for those who died". I have never heard a greater lie in my life and I am sure Ron Talbot and Don Lewis would turn in their graves if they could be cognizant of the current situation. Think about it. This is a mine which has an IRR of 27%. More exploration would probably increase this rate. The sale price to Hanlong is an indication of the rigidity of the directors collective penises. On a scale of 1 - 10, about 0.25. Mine developers will borrow $5B to develop it and pay the TOTAL back in 3 years. (Remember it has a life of 35 yrs at this stage). Why would you sell something like that? To serve your own purposes in spite of crowing that "we're doing it all for the shareholders". These directors have better ways to spend their time and more lucrative deals to do. I dont. I was really hoping that they would do what they said they were going to do. Its a game, and they will probably win this one. Time to "keep the bastards honest" I say! VOTE NO!!! to this sale!

 

[dumadiscount]

Trading halt...

And the circus continues

 

[mr. jeff]

Looking through bloomberg last night got me onto an article about SDL offering the 2nd most profitable potential deal at the moment http://www.bloomberg.com/news/2011-10-12/arbs-see-best-mining-deal-profit-in-sundance-s-china-africa-ties-real-m-a.html

it is an interesting read.
If you had the name "so cynical" on this forum, you could justify saying that there are some serious players that want to get out of their arb positions now by selling into the public as they are not very comfortable that the deal will get over the line. Or you could go buy lots and confidently wait for the return. Hard call, betting on politics.

 

[CarbonSteel]

Trading halt...

And the circus continues

Yep.
Have a look at the expensive, glossy brochure intended for the AGM. Haven't they done well? NO! They have sold us out. BIGTIME!:shoot:

 

[Jewels]

Howdy Folks, went to the AGM Yesterday, Thought I'd post some notes.
Firstly I had a quick chat to Michael Blackiston prior to the AGM. Basically I suggested that the long term shareholders were very disappointed with Both Hanlongs conduct, and low ball offer. Michael's reply was that trying to get an infrastructure project of this size (yes it is actually an infrastructure project and not an iron ore mine!) was immensely difficult in this climate, and that at the end of the day Hanlong were the only group that were prepared to stump up the cash, but it appears that Hanlong have just outplayed everybody brilliantly, and I'll get on to that bit later.

George Jones opened the meeting;
He began by stressing that we (the whole market) are in very difficult times. I must admit I had a bit of a smirk on my face when George was highlighting all the achievements since the last AGM, and stated "We attracted a corner stone investor" (Hanlong).
I just want to go into this a little further. It appears that the trustee of the Talbott estate did the deal with Hanlong for Talbots 16%, without the boards knowledge. Now after the plane crash, when the stock was languishing around 10 cents there was a real concern among the new board that there would be an unsolicited offer for the company at around this level, so the boards efforts were in the early days at least, were focused on a take over prevention strategy. This is why when Hanlong came and introduced themselves as Sundances new "Cornerstone Investor" the board were quite happy, as they knew that they now held a blocking stake for any potential hostile take over.
Now this is the bit that I was unaware of.
All the announcements that we've had that have included words to the effect of in "advanced negotiations with potential off take partners" were true. Sundance was very close to tying up an off take deal with two steel mills. Hanlong then jumped in with the first offer, and reading between the lines it was as much to prevent the off takes going through, making it impossible for Sundance to finance the Cap Ex by itself.
Brilliant!
So pretty much as soon as Hanlong made the bid, the game was over for Sundance to go forward to production in it's own right.
Now regardless of the conspiracy theorists, weather Hanlong manipulated the price down before the offer or not, the initial offer was, I think from memory, some 30% higher than the average weighted price of SDL the week before the bid.
The board was compelled to review the offer.
George mentioned that since the initial purchase Hanlong have increased their holding from 16% to 17.4%
Now to rub salt into the wounds, George went on to say that with a cost of $21.20 per tonne, this is one of the cheapest IO produces in the world.
Now we've all looked at the areo mags. We are all aware that the resource is basically the same the huge ittabirite deposits in Brazil, and we all know that there is much much more IO in the ground. George like us believes that Mbalam and Nabeeba will end up with a deposit "Multiples" of what we've defined to date.
George then went on highlighting the resource upgrades, all the work that the board has done negotiating the convention, etc.
George then said this (word for word) "In view of the existing shareholders he firmly believes this is a good offer", that the scheme of arrangement gives all the share holders a vote, and it gives Hanlong the security of getting all the conventions and permits in place prior to stumping up more cash.
Now the highly confidential letter. It was an escape clause for SDL, they chose to waive the condition, so what does that tell you?
Well some people would unkindly suggest that the board are almost scared that if the offer goes away, the share price will capitulate, whilst others might say that without Hanlong on board and the guarantee of Chinese finance that the Mbalam convention will not be signed by the Cameroonian government, and that with out that, Sundance really has nothing. I prefer to believe the latter, all though there are merits for the former argument.
Another interesting thing was that George Jones said that the head of the Chinese Development Bank (is it CITIC??) "Guaranteed the prime minister of Cameroon that they (the Bank) will be funding the project."
The resolutions were all passed.
When questioned about the remuneration report especially Giullios performance rights, Barry Eldridge basically said that the performance rights had been passed at the last AGM , and that to lure Giullio away from his Short term & long term benefits package, that SDL had to offer something better. Basically if you pay peanuts you get monkeys.
Paul Denardi then gave a very slick presentation, with a little animated film explaining everything about the whole project.
I asked Paul what had happened to the 50mtpa touted at the 2009 AGM, and he answered that they had determined that it was more profitable to mine at 35mtpa for a longer mine life with the same Capex.
Paul then went on to say that the capex was $135.00 per tonne (is that right, sounds high?) and that it was a relatively inexpensive railway because there were only nine bridges and no tunnels, and the port was also at the lower end of the cost scale due to not needing a breakwater and Being naturally quite deep.
Paul went on to explain that Chinas domestic Iron ore production was decreasing, with their demand increasing, expecting to use between 770mt and 820 mt between 2015 to 2020.
Now we know that the rail has excess capacity, so what will Hanlong get per tonne for shipping other peoples ore?
When I asked the question, Paul was reluctant to speculate, so when I asked for a guidance, and suggested $3.00 per tonne, $5.00 a tonne, or $10.00 a tonne, George Jones jumped in and said that obviously it would depend on how far the ore was transported and that for "$10.00 a tonne it would be a short trip", so for all the analysts, add at least another 500 million dollars a year to the cash flow for transporting other peoples ore (and that is very conservative!)
This post is turning into an epic
So there was plenty more said but I want to go and have a bit of a look into the future.
Now basically in a corporate sense it is highly unlikely that we will see another bid full stop. This is because Hanlong hold a significant enough stake to block any hostile take over, and the scheme of arrangement precludes any other form of take over.
However for the optimistic out there, George was saying that until the convention is signed (expected in March next year, at the national assembly meeting) that there was little chance of another offer, however after the signing of the convention, then the project would be fully derisked, and if he was (hypothetically) looking at a takeover he wouldn't make a bid until then.
And then the Big question for me, has the Cameroonian government or any of its representatives indicated to the board, or any other representatives of Sundance that they have a preference to do business with the Chinese? To me this is the question that will determine whether Vale, BHP, or RIO may show an interest.
Mr Jones then very skilfully went about not answering my question directly, but highlighted the strength of the relationship between the Chinese Government, and the Cameroonian government. That the Chinese had just built a large football stadium in Cameroon, and had financed and built other infrastructure projects in Cameroon. Exact words once again "The Cameroon Government is very happy to do business with china".
So from that little gem, I've concluded that for at least the immediate future expect nothing from SDL, a bit more drilling over the next 3 months maybe,another resource up grade maybe, but nothing until the signing of the convention in March. Then I think if you are super optimistic you may be expecting a rival bid from one of the big 3, however, even with a whole new Pilbra up for grabs, I doubt it will materialize.
Y'all have fun now, and if you have any questions re the AGM, I'll answer them tomorrow.
CiaoJ.

 

[LRG]

Excellent post jewels. Thanks. I have held onto sundance for 4 years come january. what a rollercoaster ride. now we are back at 38c the hanglong exec has jumped the country - it is getting more and more smelly.

i am thinking of exiting for good soon. got to do some calcs. To think not long ago I could have got out in the 50's or 60's back at the start of 2011.

 

[Jewels]

Just wondering if Hanlong is China's answer to Australia's Bond Corp of the 1980's?
The more we hear, the more crooked it's representatives and therefor the company sounds.
We need them to get the permits, just wondering what snake oil will appear as the signing of the conventions becomes imminent.
A question to anybody who may have a bit of a mining law background.
Can the Mbalam convention be written in such a way that it precludes a future takeover, ie the license is only awarded if Hanlong owns the resource?
Thanks in anticipation.
Jewels

 

[notting]

Interesting activities with this stock today. There was some high volume spikes going through around lunch time.
Buying.
Then later in the afternoon Bloomberg breaks this global story about how SDL is trading at less than half the offer price and how the premium is the biggest since god knows when and pumping up the tyres like you wouldn't believe.

Hmmm. Market manipulation whilst everyone is drunk and on holiday hoping everyone will come rushing in on wednesday moring whilst they sell into it!?

http://www.bloomberg.com/news/2011-12-23/sundance-resources-seen-doubling-money-today-betting-on-takeover-real-m-a.html

 

[notting]

Has moved up about %13.5 on the back of that.
Interesting to see where it goes from here.