SDL - Sundance Resources
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Convention has been signed. See ASX release
Just on my way to the AGM, will up date when I get home from the cricket.
Want to know if this weeks 3b means that Nabeeba has been up graded to 400 Million Tonnes @ 60%+, as per 2008 agreement?
If so, why no resource up grade?
Go Punter!!!
South Africa's Batsmen Vs Aussie Newbie Bowlers?????????????
Best wishes to all,
Ciao Jewels!
Just on my way to the AGM, will up date when I get home from the cricket.
Want to know if this weeks 3b means that Nabeeba has been up graded to 400 Million Tonnes @ 60%+, as per 2008 agreement?
If so, why no resource up grade?
Go Punter!!!
South Africa's Batsmen Vs Aussie Newbie Bowlers?????????????
Best wishes to all,
Ciao Jewels!
Got a bit carried away after the first two days of the cricket. We are lucky that they decided to bat first up.
So got to the AGM, unfortunately Missed GJ's presentation that was on the big screen, I take it beamed live from Africa. Got Fridays meeting time mixed up with the starting time of the meeting on the 14th.
So to business. The meeting was chaired by Fiona Harris, with Barry Eldridge, Robin Marshall, Robin Langley and Brian Conrick at the long desk.
All four resolutions were carried, with little descent.
Robin Longley, (Geologist and mining engineer) who's the GM of Geology and Exploration then gave the next presentation. He went on a bit about how he signs off on the disclaimer, and that he takes it very seriously, I felt a bit like he was trying to underline what an expert he was.
He went on to say that they had now defined 775 Million Tonnes of ittabirite.
Now here's the killer. I've been following Sundance since 2008. I got involved because the Aeromags suggested that we were only just scratching the surface of what was there, I thought back then that we had about 10 Billion Tonnes, well Robin Longley, for the first time officially to my knowledge, said that the directors believed that there was between9 to 13 BILLION TONNES OF ITTABIRITE
Accordingly stage two had immense scope in duration, or in other words this mine is going to produce for decades longer than originally anticipated. Makes 45 cents a share look like even more of a bargain doesn't it? Or back of the envelope calculations, Roughly 3 Billion shares, assume 10 Billion tonnes, about 13.5 cents per tonne! I'd based all my calculations in 2008 (post GFC) on about a dollar a tonne.............What would I know!
Now there were no other presentations to talk about, but question time was entertaining.
The first question was"Why haven't directors brought any shares in the company? Well I thought that the answer was obvious, why would a director put their own money in when the remuneration committee keeps granting them shares/options, for initiating things, rather than the successful completion of negotiations, or based on share price milestones?? My feelings were that clearly the remuneration committee were guaranteeing the directors millions of dollars in payments, regardless of the price that Hanlong eventually take the company over for. Fiona Harris answered. Basically the directors always believed that a deal was imminent. (Hanlong were obviously very good at pulling the wool over the directors eyes if that is the case) And all those other parties that we have heard were running a fine tooth comb over the data room must have been making some very promising overtures, even though they knew that Hanlong held a blocking stake, and that this precluded other Chinese entities from bidding! Now we all know that a director can't trade shares when they are in possession of knowledge that is not commonly known to the market. Fiona went on to say that she is a director of many other companies (obviously then she is picking up many other directors fees) Keeping in Mind that Fiona is on the remuneration committee, that in the 2012 report Fiona was paid $105,000.00 and 221,803 shares (or options, just from Sundance) Why would she pay and buy her own shares?? In fairness Fiona and Barry Eldridge (who is also on the remuneration committee) agreed that they also have mortgages and children in private schools. Just like a lot of other people who have put there own hard earned cash into the company I thought.
Also Fiona went on to state an argument that Non-executive directors shouldn't own shares in a company, due to conflicting interests. Not a argument that I support, and in all honesty, it appeared to be an argument that she was stating, but didn't believe in herself.
Next question Will the next reserves/resource update be before the next scheme meeting?
Now I know I found this hard to believe, but they don't know!!!! They know it is going to be a spectacular update, but the directors do not know if it will be released before the vote!!! (the question was answered by Robin Langley) This also leads to the 3b released early last week, but I'll get to that later.
The next question was Are Hanlong and the Board of Sundance IN Bed? William in the same question went on to say that the game was over for the past 18 months, that the employees of the company that WE own, have been working exclusively for Hanlong for that period (obviously at our expense).
Fiona responded to the question, buy saying that the board had been trying to get another offer, only a slightly more verbose.
Another shareholder then asked How stable was the Congo Government? I could see how he got confused with the two Congo's. Robyn Longley politely answered that their current president had been put back in power, to add stability, after a long stint as president in the 1990's. That mining investment was increasing considerably, and that mining companies didn't invest a lot when they were worried about sovereign risk.
Now the 3b. Scott asked Given the 3b lodged earlier in the week, and no accompanying resource upgrade, has the agreement from 2008 been altered? For those of you unaware the agreement was announced in 2008 and in part relates to the purchase of Nabeeba. The following is an extract of the announcement:
Tranche 1 – the issue of 5 million Sundance ordinary shares to Cominvest as follows:
(i) 1,000,000 Sundance ordinary shares upon receipt of any necessary shareholder approval,
upon receipt of any Government approvals as required under Congo and Cameroon law and
completion of legal due diligence;
(ii) 4,000,000 Sundance ordinary shares upon completion of an airborne aeromagnetic survey
and exploration report and completion of a number of administrative tasks;
Tranche 2 – the issue of 14 million ordinary Sundance shares to Cominvest on the definition of 200 million
tonnes of hematite reserves (as defined by the JORC Code) grading +60% Fe;
Tranche 3 – the issue of a further 14 million ordinary Sundance shares to Cominvest on the definition of 400
million tonnes of hematite reserves (as defined by the JORC Code) grading +60% Fe.
Now Fiona answered the question. Apparently the agreement had been changed! As a shareholder it would have been nice to know this, maybe it could have been released to the market with the 3b? I know it's not required by law, just corporate good manners I would have thought. Fiona gave the reason for the change as being " to provide more certainty" and guarantee a payout to Cominvest. Would this imply the agreement was dead if Hanlong took over, or maybe Hanlong may re-neg? either way not flattering that they felt the necessity to change the agreement, BEFORE THEY RELEASE THE UPDATE, POSSIBLY BEFORE THE VOTE!!!
Now the next question was interestingIs the Nabeeba permit to mine required by Hanlong for the scheme of arrangement to go ahead? The short answer is YES!!!! Hanlong can still pull out without penalty if the Congo Mining permit is not granted before the 18/12/2013. Call me cynical, but I'm not expecting a cheque in the 8th of January next year. It is not impossible that George and Guillio may not be able to bed down the Congo agreements in the next couple of weeks, although I have a huge amount of respect for George, as he was one of the other reasons I decided to invest back in 2008 (I was with a little company called Portman in 1996). If anyone can bring it home in the next two weeks it's George.
The final question was: Is the ratification of the Mbalam Convention by the Cameroonian Government required by Hanlong for the takeover to proceed? Once again Fiona answered the question. Basically all the people involved in the Cameroon Government to date are the people who make the decisions. The fact that the convention has been signed, basically meant that it was a fait accompli that the ratification would go ahead. She also mentioned that Hanlong were prepared to take the risk.
So there you have it, I didn't stick around to talk to anyone as I had to go to the cricket.
So this is not financial advice, this is just the way that I see it:
Hanlong have totally outfoxed the board at every turn. The board have used Hanlong to get the licenses and the agreements in place. Now I want to say here that I am a "Mum & Dad" investor, but even so the difference in the bid prices will cost me tens of thousands of dollars.
Sundance has the Mbalam convention signed.
Sundance is expecting between 9 to 13 BILLION TONNES of ittabirite To me this, and the forthcoming upgrade, renders the independent experts report redundant.
The mine life will be Decades Longer than originally forecast.
The Geology is basically the same as Vales Brazillian mines, these have been going for 4 or 5 decades to date.
Chinese companies are precluded from agreeing to off take agreements for Mbalam whilst the takeover is progressing.
Hanlongs "employees" have been charged with insider trading, not just on Sundance shares.
Hanlong have reneged on other takeovers.
A Hanlongs employee is so dishonorable that he has left his wife in Australia, and refuses to come back to face charges of insider trading, even though his supposed heart condition allowed him to fly back to China in the first place.
Last AGM Paul DeNardi stated that the board had already noticed a change in the register towards hedge funds waiting on the 57 cent offer from Hanlong.
I'm going to put my money where my mouth is. I'm going to ask the board to work harder, they've done most of the hard work, we have something now, so get back out there and get some off take agreements in place and lets not give away this resource for what is such a meager offer. The only way that can happen is if enough people vote no to the Hanlong agreement at the next meeting.
If you are not happy with the way this scheme of arrangement has been conducted to date, then get to the meeting on the 14/12/2012 at 10am and let your feelings be known to the board.
I'm going to ask my board to work harder for me, get rid of Hanlong, they've done their job now, we now have something of worth, so i'll be voting NO!
Ciao Jewels
So got to the AGM, unfortunately Missed GJ's presentation that was on the big screen, I take it beamed live from Africa. Got Fridays meeting time mixed up with the starting time of the meeting on the 14th.
So to business. The meeting was chaired by Fiona Harris, with Barry Eldridge, Robin Marshall, Robin Langley and Brian Conrick at the long desk.
All four resolutions were carried, with little descent.
Robin Longley, (Geologist and mining engineer) who's the GM of Geology and Exploration then gave the next presentation. He went on a bit about how he signs off on the disclaimer, and that he takes it very seriously, I felt a bit like he was trying to underline what an expert he was.
He went on to say that they had now defined 775 Million Tonnes of ittabirite.
Now here's the killer. I've been following Sundance since 2008. I got involved because the Aeromags suggested that we were only just scratching the surface of what was there, I thought back then that we had about 10 Billion Tonnes, well Robin Longley, for the first time officially to my knowledge, said that the directors believed that there was between9 to 13 BILLION TONNES OF ITTABIRITE
Accordingly stage two had immense scope in duration, or in other words this mine is going to produce for decades longer than originally anticipated. Makes 45 cents a share look like even more of a bargain doesn't it? Or back of the envelope calculations, Roughly 3 Billion shares, assume 10 Billion tonnes, about 13.5 cents per tonne! I'd based all my calculations in 2008 (post GFC) on about a dollar a tonne.............What would I know!
Now there were no other presentations to talk about, but question time was entertaining.
The first question was"Why haven't directors brought any shares in the company? Well I thought that the answer was obvious, why would a director put their own money in when the remuneration committee keeps granting them shares/options, for initiating things, rather than the successful completion of negotiations, or based on share price milestones?? My feelings were that clearly the remuneration committee were guaranteeing the directors millions of dollars in payments, regardless of the price that Hanlong eventually take the company over for. Fiona Harris answered. Basically the directors always believed that a deal was imminent. (Hanlong were obviously very good at pulling the wool over the directors eyes if that is the case) And all those other parties that we have heard were running a fine tooth comb over the data room must have been making some very promising overtures, even though they knew that Hanlong held a blocking stake, and that this precluded other Chinese entities from bidding! Now we all know that a director can't trade shares when they are in possession of knowledge that is not commonly known to the market. Fiona went on to say that she is a director of many other companies (obviously then she is picking up many other directors fees) Keeping in Mind that Fiona is on the remuneration committee, that in the 2012 report Fiona was paid $105,000.00 and 221,803 shares (or options, just from Sundance) Why would she pay and buy her own shares?? In fairness Fiona and Barry Eldridge (who is also on the remuneration committee) agreed that they also have mortgages and children in private schools. Just like a lot of other people who have put there own hard earned cash into the company I thought.
Also Fiona went on to state an argument that Non-executive directors shouldn't own shares in a company, due to conflicting interests. Not a argument that I support, and in all honesty, it appeared to be an argument that she was stating, but didn't believe in herself.
Next question Will the next reserves/resource update be before the next scheme meeting?
Now I know I found this hard to believe, but they don't know!!!! They know it is going to be a spectacular update, but the directors do not know if it will be released before the vote!!! (the question was answered by Robin Langley) This also leads to the 3b released early last week, but I'll get to that later.
The next question was Are Hanlong and the Board of Sundance IN Bed? William in the same question went on to say that the game was over for the past 18 months, that the employees of the company that WE own, have been working exclusively for Hanlong for that period (obviously at our expense).
Fiona responded to the question, buy saying that the board had been trying to get another offer, only a slightly more verbose.
Another shareholder then asked How stable was the Congo Government? I could see how he got confused with the two Congo's. Robyn Longley politely answered that their current president had been put back in power, to add stability, after a long stint as president in the 1990's. That mining investment was increasing considerably, and that mining companies didn't invest a lot when they were worried about sovereign risk.
Now the 3b. Scott asked Given the 3b lodged earlier in the week, and no accompanying resource upgrade, has the agreement from 2008 been altered? For those of you unaware the agreement was announced in 2008 and in part relates to the purchase of Nabeeba. The following is an extract of the announcement:
Tranche 1 – the issue of 5 million Sundance ordinary shares to Cominvest as follows:
(i) 1,000,000 Sundance ordinary shares upon receipt of any necessary shareholder approval,
upon receipt of any Government approvals as required under Congo and Cameroon law and
completion of legal due diligence;
(ii) 4,000,000 Sundance ordinary shares upon completion of an airborne aeromagnetic survey
and exploration report and completion of a number of administrative tasks;
Tranche 2 – the issue of 14 million ordinary Sundance shares to Cominvest on the definition of 200 million
tonnes of hematite reserves (as defined by the JORC Code) grading +60% Fe;
Tranche 3 – the issue of a further 14 million ordinary Sundance shares to Cominvest on the definition of 400
million tonnes of hematite reserves (as defined by the JORC Code) grading +60% Fe.
Now Fiona answered the question. Apparently the agreement had been changed! As a shareholder it would have been nice to know this, maybe it could have been released to the market with the 3b? I know it's not required by law, just corporate good manners I would have thought. Fiona gave the reason for the change as being " to provide more certainty" and guarantee a payout to Cominvest. Would this imply the agreement was dead if Hanlong took over, or maybe Hanlong may re-neg? either way not flattering that they felt the necessity to change the agreement, BEFORE THEY RELEASE THE UPDATE, POSSIBLY BEFORE THE VOTE!!!
Now the next question was interestingIs the Nabeeba permit to mine required by Hanlong for the scheme of arrangement to go ahead? The short answer is YES!!!! Hanlong can still pull out without penalty if the Congo Mining permit is not granted before the 18/12/2013. Call me cynical, but I'm not expecting a cheque in the 8th of January next year. It is not impossible that George and Guillio may not be able to bed down the Congo agreements in the next couple of weeks, although I have a huge amount of respect for George, as he was one of the other reasons I decided to invest back in 2008 (I was with a little company called Portman in 1996). If anyone can bring it home in the next two weeks it's George.
The final question was: Is the ratification of the Mbalam Convention by the Cameroonian Government required by Hanlong for the takeover to proceed? Once again Fiona answered the question. Basically all the people involved in the Cameroon Government to date are the people who make the decisions. The fact that the convention has been signed, basically meant that it was a fait accompli that the ratification would go ahead. She also mentioned that Hanlong were prepared to take the risk.
So there you have it, I didn't stick around to talk to anyone as I had to go to the cricket.
So this is not financial advice, this is just the way that I see it:
Hanlong have totally outfoxed the board at every turn. The board have used Hanlong to get the licenses and the agreements in place. Now I want to say here that I am a "Mum & Dad" investor, but even so the difference in the bid prices will cost me tens of thousands of dollars.
Sundance has the Mbalam convention signed.
Sundance is expecting between 9 to 13 BILLION TONNES of ittabirite To me this, and the forthcoming upgrade, renders the independent experts report redundant.
The mine life will be Decades Longer than originally forecast.
The Geology is basically the same as Vales Brazillian mines, these have been going for 4 or 5 decades to date.
Chinese companies are precluded from agreeing to off take agreements for Mbalam whilst the takeover is progressing.
Hanlongs "employees" have been charged with insider trading, not just on Sundance shares.
Hanlong have reneged on other takeovers.
A Hanlongs employee is so dishonorable that he has left his wife in Australia, and refuses to come back to face charges of insider trading, even though his supposed heart condition allowed him to fly back to China in the first place.
Last AGM Paul DeNardi stated that the board had already noticed a change in the register towards hedge funds waiting on the 57 cent offer from Hanlong.
I'm going to put my money where my mouth is. I'm going to ask the board to work harder, they've done most of the hard work, we have something now, so get back out there and get some off take agreements in place and lets not give away this resource for what is such a meager offer. The only way that can happen is if enough people vote no to the Hanlong agreement at the next meeting.
If you are not happy with the way this scheme of arrangement has been conducted to date, then get to the meeting on the 14/12/2012 at 10am and let your feelings be known to the board.
I'm going to ask my board to work harder for me, get rid of Hanlong, they've done their job now, we now have something of worth, so i'll be voting NO!
Ciao Jewels
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New date commitments should have come with another 14mil break fee.
If Hanlong are serious this would mean nothing to them.
If Hanlong are serious this would mean nothing to them.
skc
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Picking a day in the middle of Chinese New year and saying that it will be all OK....
I don't like it...
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Thank you for the in-depth coverage Jewels. Agree with your decision to vote "no" 100%. Hopefully the instos will have the testes to follow suit and bring some real pressure to bear!
Merry Christmas to all SDL shareholders. The share price would suggest that the rumored counter bid looks like it is going the same direction as the rumored off take agreements of previous years. My wish for us all is that Santa offers us a counter bid, forcing a counter counter bid from the China Development Bank, but I'm not holding my breath.
Remember at the last AGM Sundance announced they are targeting between 9 to 13 Billion tonnes of Iron Ore! A project to produce 10% of Cameroons GDP, and a billion dollar cash flow based on Iron Ore prices less than half of today's price. I'm about to go off grid for the rest of the year, so stay Happy, Healthy and Safe over the festive season, may you spend some quality time with those you love, and may Christmas 2012 be your best one yet.
Merry Christmas
Jewels
Remember at the last AGM Sundance announced they are targeting between 9 to 13 Billion tonnes of Iron Ore! A project to produce 10% of Cameroons GDP, and a billion dollar cash flow based on Iron Ore prices less than half of today's price. I'm about to go off grid for the rest of the year, so stay Happy, Healthy and Safe over the festive season, may you spend some quality time with those you love, and may Christmas 2012 be your best one yet.
Merry Christmas
Jewels
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Just quietly I think the Chinese really, really want this.
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Last year, Bloomberg bumped this up like you wouldn't believe over Christmas.
This year Sky Business has been doing the same.
They even said that all the conditions are now in place for the contract of purchase to proceed now that SDL has this latest approval announced today by the local government.
That's true, in that Sundance has the conditions in place, but Hanlon has plenty of loop holes it can still escape through with limited loss of face as they all head off for the Chinese new year.
Also, the previous date for the deal to be done was December 15.
Nothing about this 'condition' fullfilled today was mentioned as a cause for latest delay.
It would now be a good time for an alternate bidder to come to the table if this thing is as good as they all say.
One of the big three BHP, RIO or Vale should have a go just to keep China out of sabotaging the supply side.
This is pretty big for Austalia if we lose it.
This year Sky Business has been doing the same.
They even said that all the conditions are now in place for the contract of purchase to proceed now that SDL has this latest approval announced today by the local government.
That's true, in that Sundance has the conditions in place, but Hanlon has plenty of loop holes it can still escape through with limited loss of face as they all head off for the Chinese new year.
Also, the previous date for the deal to be done was December 15.
Nothing about this 'condition' fullfilled today was mentioned as a cause for latest delay.
It would now be a good time for an alternate bidder to come to the table if this thing is as good as they all say.
One of the big three BHP, RIO or Vale should have a go just to keep China out of sabotaging the supply side.
This is pretty big for Austalia if we lose it.
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At the risk of making this my blog.
It's a bit strange that the Chinese have published, in their local media, that Hanlon are all set to complete the deal.
The Chinese usually like to do these things without too many people noticing.
It makes me wonder if they would actually like a competing bidder to come in so they can offload.
If the deposite is as good as all say, then you'd really think the other big 3 would have a crack at what would be a bargain and supply inhibiting stake.
Their has been a bit of selling going on, into this holiday media pumped rally, including me because I'v already got 20% on a big steak and these things are always risky to bet big on with frightening gap to the downside on another delay.
But Just the same I think if the deposite is as good as reported.
The Chinese really want this and the others are asleep at the wheel.
It's a bit strange that the Chinese have published, in their local media, that Hanlon are all set to complete the deal.
The Chinese usually like to do these things without too many people noticing.
It makes me wonder if they would actually like a competing bidder to come in so they can offload.
If the deposite is as good as all say, then you'd really think the other big 3 would have a crack at what would be a bargain and supply inhibiting stake.
Their has been a bit of selling going on, into this holiday media pumped rally, including me because I'v already got 20% on a big steak and these things are always risky to bet big on with frightening gap to the downside on another delay.
But Just the same I think if the deposite is as good as reported.
The Chinese really want this and the others are asleep at the wheel.
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notting, the others are not asleep at the wheel. The fact is that the big 3-4 mining houses have tens of billions of tonnes of iron ore in their reserves already, and they have these reserves in Australia and South America. These mining houses see expansion of their current mines as far more logical than trying to start greenfield projects in untried jurisdictions. SDL's projects may, one day, if all goes exactly according to plan, mine somewhere between 50-100mt per annum. This is an "all going to plan perfectly" scenario. The current plans are to produce 35mtpa. Total iron ore production is tipped to reach 2Bn tonnes per annum shortly and increase towards 3Bn tonnes per annum over the next decade and onwards. To put it kindly, SDL's tenements are but a tiny drop in the overall IO landscape, and they are situated in the middle of Africa with no associated infrastructure and all of the political and sovereign risk. It's no wonder the big mining houses would prefer to expand their operations in the Pilbara and in South America rather than take on such risk. SDL is not the IO cartel breaking asset some people make it out to be. If, somehow, the Chinese manage to squeeze out 100mtpa out of the area in 10 years time (highly, highly, HIGHLY unlikely), it's only going to be maybe 4% of total global production. It's not large enough to have any say in IO prices whatsoever.
There might be 9Bt of itabirite on the tenements, but you need to remember that the itabirite is situated in the third quartile of the cost curve when looking at OPEX. This is according to SDL's own cost curve graphs. The DSO has a very low OPEX, the itabirite does not. RIO and BHP can expand their Pilbara DSO operations exponentially and remain far below SDL's itabirite OPEX, and if, as predicted, we see IO supply catch up with demand over the next 5-10 years, SDL's itabirite will start to look more like a marginal producer. If the itabirite's OPEX is $50p/t+ in 10 years time and supply has caught up with demand thanks to aggressive BHP/RIO/Vale/FMG expansion, how attractive is the itabirite resource then?
The big IO mining houses will have looked at this in great detail, and if they don't make a move on SDL it's because they have better options available to them. These options will most likely be expanding their current operations, while they let the Chinese spend untold billions in the middle of Africa trying to get SDL off the ground. Just look at what's happened with Sino in WA.
Edit: I'll add that RIO has it's Simandou project and it looks like BHP may be awarded Belinga in Gabon, so it's not as though the big miners are ignoring Africa altogether, it's just that the next increase in production over the next decade is going to come from expansion of mines and infrastructure already in place.
There might be 9Bt of itabirite on the tenements, but you need to remember that the itabirite is situated in the third quartile of the cost curve when looking at OPEX. This is according to SDL's own cost curve graphs. The DSO has a very low OPEX, the itabirite does not. RIO and BHP can expand their Pilbara DSO operations exponentially and remain far below SDL's itabirite OPEX, and if, as predicted, we see IO supply catch up with demand over the next 5-10 years, SDL's itabirite will start to look more like a marginal producer. If the itabirite's OPEX is $50p/t+ in 10 years time and supply has caught up with demand thanks to aggressive BHP/RIO/Vale/FMG expansion, how attractive is the itabirite resource then?
The big IO mining houses will have looked at this in great detail, and if they don't make a move on SDL it's because they have better options available to them. These options will most likely be expanding their current operations, while they let the Chinese spend untold billions in the middle of Africa trying to get SDL off the ground. Just look at what's happened with Sino in WA.
Edit: I'll add that RIO has it's Simandou project and it looks like BHP may be awarded Belinga in Gabon, so it's not as though the big miners are ignoring Africa altogether, it's just that the next increase in production over the next decade is going to come from expansion of mines and infrastructure already in place.
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Thank you for your reply Muffin Man.
The media, and others have been calling this as a potential 20% global hog in 3 years!
Why they are all doing that is kind of crazy if what you say is true and it sounds like you know what you are talking about.
The Chinese have invested 600B in a plot next door to SDLs plot, which is syncronistic and makes it a bit more viable in terms of size relative to infrastructure investment required.
The sovereign risk is something they have played quite successfully over there, in their way,:2evil: to date.
You have finally given a clarifying statement that has been evasive to this point.
So thanks again for the bite!
The media, and others have been calling this as a potential 20% global hog in 3 years!
Why they are all doing that is kind of crazy if what you say is true and it sounds like you know what you are talking about.
The Chinese have invested 600B in a plot next door to SDLs plot, which is syncronistic and makes it a bit more viable in terms of size relative to infrastructure investment required.
The sovereign risk is something they have played quite successfully over there, in their way,:2evil: to date.
You have finally given a clarifying statement that has been evasive to this point.
So thanks again for the bite!
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Sorry about that number!!!! It should be Million of course!!
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Do you mean just the SDL tenements and those surrounding it? IMO there's no chance of that happening. A '20% global hog' would mean they'd have to be producing 400MT from the area and the infrastructure palns only have a capacity of 100MT. Keep in mind that the Chinese also have very little experience in operating mines like the ones planned at Mbalam & Nabeba, and that they have to build a 500KM railway through dense jungle before mining 1 tonne of product. The Sino project in WA had a starting budget of $2Bn and it's blown out to $8Bn now. Granted labour in Australia is far dearer but Africa poses unique problems of it's own. You need to assess the planned output from the region against global output. If global output is 2btpa and SDL's tenements are producing 35mtpa (or 1.75% of production), what effect will the area really have on prices? If in 10 years time the global output is 2.5btpa thanks to RIO/BHP/FMG aggressive expansion already in the works and the SDL tenement area is producing 100mtpa (still highly unlikely in my opinion), that's still only representing 4% of global production.
If you're taking a greater view in regards to that 20% figure and encompassing all of Africa, I still think the 3 year time frame is going to be way off the mark. In time (decades) Africa will grow to be a bigger player. The mining houses have seen this and have moved in to specific areas (RIO with Simandou, BHP may be getting Belinga), but that's way down the track when the mining houses have maxed out expansion in South America and Australia IMO. If they don't make a play on SDL, the big mining houses have judged that the best use of their capital is to expand their existing operations, and I don't blame them for making that assessment.
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The way the media and not just one source have been promoting it!!! is as if it is the stand alone plot that SDL have. The 600M investment in a plot next door is from another Chinese company pretending to be something different.
In General, you can hire experience.
I agree that 3 years seems unrealistic.
Fair point.
However, what the Chinese will attempt to do is manipulate the price in general as been so blatantly obvious over the last 6 months, where they shut down imports and production and made many purchases in the sectore and failed at few, did the same with oil using up reserves and made the biggest purchasing in oil globally ever.
Even causing ministers to declair an end of the mining boom!!
On top of the manipulation they will, more and more use their own suppliers which they have increased investment in over the last 5 months! They will use SDL and other plots to cause FMG and others to be less agressive with their expansion plans. Thus gain leverage supply capacity and control to supply themselves over the big 3.
Many of the managers of the larger companies who are still scailing back as confirmed again by RIO yesterday, despite the rebound or ore prices.
But any way.
The main thing is whether the media has basically been lying to the public on a large scale probably due to repeating what they hear from orther media pools, rather than checking the information with experts in the field, about the size and impact of SDL which, you are saying is not 20% potential in 3 or 4 years.
You'd think someone would have popped their head up and said this is crap.
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IMO there's no way SDL's tenements and the immediate area is going to be providing 20% of global production in 3 years, or 10 years.
The mining houses can't buy every single IO deposit out there. Remember also that after the DSO, of which there is only a 775mt reserve (775mt really is quite small when you look at it in the context of the big 3 miners and their reserves), the deposits switch to itabirite. The 10Bn tonnes being touted is mainly itabirite and that's in the 3rd quartile of the cost curve. The itabirite really isn't anything special, and it's not as good as the DSO resources RIO & BHP already own in Australia. So, does it make more sense for one of these big mining houses to stump up $6.5Bn+ ($1.5Bn+ takeover and at least $5Bn for first stage CAPEX) for a project in the middle of the jungle in Africa to access 775mt DSO and a massive amount of itabirite, or use that $6.5Bn+ to access billions of tonnes of DSO in Australia?
Take RIO for example, it has a ridiculously low OPEX on it's DSO operations in Australia, something like $30p/t. So, they can allocate $6.5Bn of their capital to expanding their DSO operations in Australia and keep churning out billions of tonnes of ore at that $30p/t OPEX, or invest in SDL's tenements, where after the 775mt of DSO runs out that has an OPEX of $25p/t, they have to start mining itabirite that has an OPEX of $50. Just strictly on those sums it doesn't seem logical to be allocating that money to Africa, and that's before assessing political/sovereign risk, African unskilled labour markets etc.
"Many of the managers of the larger companies who are still scailing back as confirmed again by RIO yesterday"
Correct, so does that scarce capital of the big mining houses now get allocated to Australia or Africa? IMO it'll be Australia, hands down.
The mining houses can't buy every single IO deposit out there. Remember also that after the DSO, of which there is only a 775mt reserve (775mt really is quite small when you look at it in the context of the big 3 miners and their reserves), the deposits switch to itabirite. The 10Bn tonnes being touted is mainly itabirite and that's in the 3rd quartile of the cost curve. The itabirite really isn't anything special, and it's not as good as the DSO resources RIO & BHP already own in Australia. So, does it make more sense for one of these big mining houses to stump up $6.5Bn+ ($1.5Bn+ takeover and at least $5Bn for first stage CAPEX) for a project in the middle of the jungle in Africa to access 775mt DSO and a massive amount of itabirite, or use that $6.5Bn+ to access billions of tonnes of DSO in Australia?
Take RIO for example, it has a ridiculously low OPEX on it's DSO operations in Australia, something like $30p/t. So, they can allocate $6.5Bn of their capital to expanding their DSO operations in Australia and keep churning out billions of tonnes of ore at that $30p/t OPEX, or invest in SDL's tenements, where after the 775mt of DSO runs out that has an OPEX of $25p/t, they have to start mining itabirite that has an OPEX of $50. Just strictly on those sums it doesn't seem logical to be allocating that money to Africa, and that's before assessing political/sovereign risk, African unskilled labour markets etc.
"Many of the managers of the larger companies who are still scailing back as confirmed again by RIO yesterday"
Correct, so does that scarce capital of the big mining houses now get allocated to Australia or Africa? IMO it'll be Australia, hands down.
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I'm not sure it's scarce capital making them scale back, it's more like slowing down due to more supply.
BHP announced that demand is till strong however there is more supply on the market which they were saying is one reason why the Ore price has the potentual to settle at lower levels to it's current price.
I accept that perhaps there is not going to be another bidder at this point for SDL and if what you say about the size of it not being as great as all the talking heads have been saying then that would make some sense.
I really appreciate your input.
Thank you.
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No worries, I like the discussion.
I wasn't meaning the mining houses don't have the money, I was meaning they are scaling back how much they are prepared to invest in CAPEX over the next few years. Their CAPEX budgets have been trimmed, so money available for CAPEX spending has become more scarce. IMO they will allocate the bulk of this reduced CAPEX to expanding Australian operations before taking on greenfield African projects.
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There was never any doubt in my mind that the so called smaller privately owned Chinese resource company Hanlon was just a tug boat for China Co.
Now, of course, the Chinese have gone through the play acting of being instructed by China Co's NDRC to sign up a much larager China Co resource company to 'partner them in this large project'.
The whole point of trying to look like a mino without state backing was to keep the price down and keep trying to push it down.
It was a smart move by SDL to voluntarily suspend whilst Hanlon came up with something a little more substantial in it's attempt to appear like it's dragging it's feet, again to try to push the price down.
It is interesting and comical that China Co's NDRC has specifically instructed Hanlon that it must partner with another much larger Chinese Company in order to get the funding it needs to make the deal. They didn't say get any partner!! :dunno: Geeee wonder why?
Miraculusly Hanlon are already in advanced stages of negotiations with such a larger Chinese Resource Company to help them clinch the deal. So advanced, in fact, that the new deadline for the deal is AOK for lift off.
WOW that was slick. Let's all take a break for the new year of the of the aahh uuumm snake.
It also explains why the Chinese propaganda machine was reporting in the state controlled Chinese media that Chinese owned Hanlon were going to get the asset, however, were also looking for someone to partner them in the deal. Preping to make it seem less miraculous that the privatly owned Chinese Hanlon could so easily get the larger Chinese Co partner, on board.!?
If our media report this with headlines like "Another Delay as it re opens tomorrow, there could be a window of opportunity for the savvy!:dance:
Unless of course it's a last stage bluff to try and draw in a bigger player to the table so they can offload, but I don't think so. They could also come back and say, Well, we got this big partner, but they only wonna pay 30c per share. Doubt it.
Ill be going for gold if it tanks!
View attachment SDL.pdf
Disclaimer - Takeovers are very risky to play, in an arena that is very risky. Be prepaired to lose more than 20% in the blink of an eye if China Co. walks cause SDL got buckleys of getting this thing off the ground on their own!
Now, of course, the Chinese have gone through the play acting of being instructed by China Co's NDRC to sign up a much larager China Co resource company to 'partner them in this large project'.
The whole point of trying to look like a mino without state backing was to keep the price down and keep trying to push it down.
It was a smart move by SDL to voluntarily suspend whilst Hanlon came up with something a little more substantial in it's attempt to appear like it's dragging it's feet, again to try to push the price down.
It is interesting and comical that China Co's NDRC has specifically instructed Hanlon that it must partner with another much larger Chinese Company in order to get the funding it needs to make the deal. They didn't say get any partner!! :dunno: Geeee wonder why?
Miraculusly Hanlon are already in advanced stages of negotiations with such a larger Chinese Resource Company to help them clinch the deal. So advanced, in fact, that the new deadline for the deal is AOK for lift off.
WOW that was slick. Let's all take a break for the new year of the of the aahh uuumm snake.
It also explains why the Chinese propaganda machine was reporting in the state controlled Chinese media that Chinese owned Hanlon were going to get the asset, however, were also looking for someone to partner them in the deal. Preping to make it seem less miraculous that the privatly owned Chinese Hanlon could so easily get the larger Chinese Co partner, on board.!?
If our media report this with headlines like "Another Delay as it re opens tomorrow, there could be a window of opportunity for the savvy!:dance:
Unless of course it's a last stage bluff to try and draw in a bigger player to the table so they can offload, but I don't think so. They could also come back and say, Well, we got this big partner, but they only wonna pay 30c per share. Doubt it.
Ill be going for gold if it tanks!
View attachment SDL.pdf
Disclaimer - Takeovers are very risky to play, in an arena that is very risky. Be prepaired to lose more than 20% in the blink of an eye if China Co. walks cause SDL got buckleys of getting this thing off the ground on their own!
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One lesson I have learn't is if a Chinese Company is involved in the takeover - sell. When the 57c deal was first announced, share price hit 54c for a few days, and I did think about moving on and selling. Now eighteen months later we may get 45c.
I will still hang out for the conclusion.
I will still hang out for the conclusion.
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