Hey Team,
It appears that there are some misconceptions on this blog,so as I was able to get to the AGM thought I'd fill you guys in.
Firstly the directors remuneration thingy, like you guys, initially I thought that the directors were voting themselves a pay rise. NOT TRUE!
It would appear thet due to an oversite SDL had been paying it's directors more than it was allowed to, hence resolution 1. In order to attract quality directors in the future, and allow additional directors to be added to the board as their expertise became necessary, SDL had to increase the amount that it was able to pay the directors as a whole, hence resolution 4.
George Jones said that the board had no intention of increasing it's remuneration, and infact had decided to make the directors remuneration more transperant by paying all directors in cash, ie no shares, options etc, with bonuses paid on achieving certain criteria. GJ did not elaborate on the criterea, but I got the impression that they were both operational and corporate. If anyone wants to know I'm sure sdl could email their directors remuneration agreement to you on request.
I think we are all very lucky that GJ is still here. He was in The Taj Hotel in Mumbai less than 12 hours before the terrorist attacks. Apparently his floor was targeted by the terrorists with grenades and automatic weapons. What do you reckon could have happened to the SP if the terrorists had of arrived 24 hours earlier (Not to mention poor old GJ!)?
George expects 2009 to be a "hard year", although he does expect the share price to rise. In Georges words: "for the size of the resource, Sundances current market cap is a joke".
Don Lewis later explained that there was a South American I.O miner that was very similar (in terms of I.O. quality, type and output) to SDL, that sold a 40% stake to a Japanese steel mill for 5 Billion dollars about a year ago. Now I know it was at the top of the market, but you do the maths and compare it to SDL's current market cap of about $167million. Sorry can't read my own writing to give you the name of the company, if anybody really wants to know I'll email SDL and get it for you.
Big news for Don Lewis was the increase in output from 35mtpa to 50mtpa, with additional revenues created being used to retire debt earlier.
Infrastructure costs may come in under estimated capex. Siesmic work on the rail line has shown the rocks to be softer than originally anticipated, and further work at kribi shows that deep water is much closer to shore than first thought, allowing pilbra style loading facilities to be built.
One thing I've been worried about since the beginning of the world wide recession is whether or not 2012 was realistic for the commencement of production, not so much from a financing point of view, but more from a demand and supply point of view. When I asked the question of GJ his initial words were something like "at a stretch". He then went on to say that the Cameroon Gov't realised that this mine could go on to provide 8% of Cameroons GDP, and that both parties wanted to move this project forward as quickly as possible. He also said that he wouldn't retire until they had shipped their first ore.
Also on the world recession George was able to put a positive spin
on it for SDL. A lot of existing miners (read Vale, BHP, RIO, FMG) have put a hold on planned expansions, and minnows and hopefuls had no chance of raising finance. This meant that there shouldn't be a huge increase in supply over the next 3 or 4 years. On top of this the quality and the quantity of SDL's ore meant that it would be one of the most cost effective mines, and that in times of recession there would be a flight to quality.
Don Lewis explained that the aero magnetic data survey had only just been completed, and that results would be available in January. I'd expect that we can look forward to a very positive announcement in January. Look at Google Earth to get a bit of an idea.
Somebody asked about cash burn. Both DL and GJ were on the front foot. Apparently because SDL had spent so much and proved up the resource in such a relatively short time the Cameroon Gov't has relaxed its drilling and exploration requirements. I think DL said that they will have met the requirements for the lease in the next couple of months. Also DL let it slip that there could be an announcement very soon (Monday maybe) about a reduction in operating costs at the site. My gut reaction is that the drilling company that is left (One got the sack) will be drilling at a reduced cost to SDL. With current cash at bank both GJ & DL are not expecting to need to raise capital in the next 12 months.
Now we all know that the success of SDL hinges on two things: Offtake agreements and the MOU with the Gov't of Cameroon.
With the MOU, don't hold your breath! It would appear that the negotiation of the MOU is far more difficult than anticipated. GJ politely put it down to the French Beuracratic system that Cameroon had inherrited from it's colonial masters. However I got the feeling it may be far more complicated.
When I asked GJ about quotes attributed to him on Cameroon State TV (see my previous posts) he replied "that interview was given immediatly after he had a meeting with the prime minister and the minister for mines, and that they were still negotiating. The Cameroon Government understands that if the MOU is not favorable then the project simply wont go ahead, and both parties want the project to be a success."
I asked if off take agreements were dependant on the MOU? GJ's reply was "we are dealing with international citizins who understand the intricacies of dealing with Gov'ts when negotiating MOU's, they (the off take agreements) were not dependant on the MOU".
All in all I got a very good feeling about the meeting and SDL's future. GJ & DL believe that this project is going to become much, much bigger, and that we still have no idea how much ore is actually there, Mbalam is still open at depth of over 600m, and aero mag data still in the pipeline for other tennaments..
I think I may go out on Monday a top up with a few more. So many bargains, so little money!!!
Anyway hope that helps iron out a few things.
Ciao...Jewels