SDL - Sundance Resources

[Sean K]

SDL is not looking very good IMHO. I think we will see 7 cents within the next 2 weeks. I dont think their only project will get up and running for many years, if at all. The price of IO makes it unviable and the port and rail costs are extreme. They basically have no cash and i cannot see a Steel Mill anywehre in the world helping them develop their deposits any time soon. You can also completely rule out the credit markets. Also, Africia is unstable at the best of times.

Brockman Resources seem a far superior buy IMO. They have 110 million in the bank, no debts and only 130 million shares outstanding. They are currently trading at cash value only. 1.6 Billion tones of high grade ore within a few kms from existing, new train/port facilities.

Also, they are currently in talks with up to 12 different steel producers from several different countries and have appointed UBS to make a deal.

Much better play IMO. Good luck with SDL. I have it on watch and i may grab a few hundred thousand at 5 cents for a gamble.

7 cents has no foundation, but the rest of what you say makes some sence.

(if you added in the lows where it held it might be OK)

Please refrain from price targets on ASF without some justification.

Cheers,
kennas

 

[snopandsnap]

My justification is that the project will never happen IMO. My 5 - 7 cent prediction is just a guess, as good as any. I do not do charting but I have invested in the markets for more than 20 years and i work as an investment banker. SDL has some nice reserves, but reserves are useless if you can not get them out of the ground.
So many negatives by far outway the positives for this stock.
You will find that most holders of this stock are speculators trying to make a quick buck. I warned a few of my friends not to buy this but many still got in between 50 and 70 cents and now they are left holding the bag.

I would stick to good asset Australian stocks. Small african stocks very rarely make money and most never get off the ground at all.

Good luck.

 

[Sean K]

My justification is that the project will never happen IMO. My 5 - 7 cent prediction is just a guess, as good as any. I do not do charting but I have invested in the markets for more than 20 years and i work as an investment banker.

An investment banker and your 5-7 cent mark is a guess?

Must be at BNB.

Good luck.

Nice to have a professional on board!

 

[The Muffin Man]

The stock seems to have found an 8-10 cent range since it followed the lead of the majority of stocks around the World and fell pretty sharply in October. Currently trading at 11 cents, I'm not sure if I can see any reasoning behind why it might fall 4 cents (around 40%) in the next two weeks to below recent support levels. I don't think there will be much action price wise until further information on off-take and strategic partners is released.

snopandsnap, I guess we are all banking on the fact that steel producers can see past their noses and realise that the current adverse economic conditions won't last forever. The target year for production has always been 2012 or later, so the conditions being experienced now, at the start of 2009, hopefully don't sway the thoughts of steel producers too much. Possible output of 35m-50m tonnes per year (from a base of at least 2.45Bn tonnes) has to be appealing to steel producers looking to secure major independent suppliers of Iron Ore. You're right though, the issue has always been financing. Recent releases from the company do however contain some very strong wording regarding interest displayed from possible off-take/strategic partners.

 

[snopandsnap]

You cannot do anything but guess what these small penny stocks will do?

If all investment bankers where correct, how come most people have been left holding the bag.
My point is this. Why would a steel mill or anyone else pump money into this company when they can secure much safer investments and reserves without paying billions to get it to a ship? Also, Africia is so unstable and you have to be in the governments pocket to get anything done.
The company only paid about 250K for the asset in the first place.
The market value for this stock is cash in bank plus a few extra million for the asset at the most. My calculation make it worth around 2 to 3 cents at best.

But once again, good look with the technicals on this stock.

 

[The Muffin Man]

You cannot do anything but guess what these small penny stocks will do?

If all investment bankers where correct, how come most people have been left holding the bag.
My point is this. Why would a steel mill or anyone else pump money into this company when they can secure much safer investments and reserves without paying billions to get it to a ship? Also, Africia is so unstable and you have to be in the governments pocket to get anything done.
The company only paid about 250K for the asset in the first place.
The market value for this stock is cash in bank plus a few extra million for the asset at the most. My calculation make it worth around 2 to 3 cents at best.

But once again, good look with the technicals on this stock.

I'm not familiar with Brockman so you will have to forgive me. But doing some quick research shows their mine producing a possible 15-25mtpa. What's the CAPEX estimated at for the project? I mean, it might cost more to get Mbalam off the ground, but it will produce double what the Brockman mine is planning on producing. So to answer the question, if the payback periods regarding the projects are comparable then the larger project becomes more atteactive the further past the payback period the project extends. But again, I'll have to look the estimated CAPEX of the Brockman project up.

As for the Government in the pocket, the Cameroon Government already holds 10% of the subsidiary of SDL that holds Mbalam, and can increase that to 25% if they wish. If they increase by the extra 15%, they have to pay 15% of the capital costs in developing the mine and infrastructure.

 

[CarbonSteel]

SDL is not looking very good IMHO. I think we will see 7 cents within the next 2 weeks. I dont think their only project will get up and running for many years, if at all.

Think I'll stick with Talbot and Co. anyway.

And this from

http://news.xinhuanet.com/english/2009-01/16/content_10671286.htm

dated 16 January 2009

"Plans to boost automobile and steel sectors, the "pillar industries", were rolled out on Wednesday, and more specific measures for manufacturing and the oil refining industry are expected."
:newbie:

 

[LRG]

yes, all news is pretty negative in the mining industry - many people being put out of work.

i suspect sdl may languish for 6 months at least?

i hope it doesn't fall too much

 

[CarbonSteel]

i suspect sdl may languish for 6 months at least?

i hope it doesn't fall too much

Actually, there have been a lot of selling pressures apparent in the last 2 days. XMJ down 4% yesterday!

Our selection is holding it's ground very well, I think.

 

[Jewels]

Hi Team,
Very positive aeromag data released.
Points of note; Mt Nabeba is being compared to Mbalam.
Possible 100 Million tonnes of DSO quality ore ( no mention of possible itabirite reserves)
Mt Nababa has a 2 to 3 kl strike length.
Mbalam continues south into the Congo as we suspected.
A few holes have already been drilled, and it looks like low impurities from samples taken, Silicon oxide ranges from 1.13% to 1.98% & Aluminium Oxide 1.95% to 3.79%.

For previous posters who doubt this project will ever go ahead:

The Cameroon Government will own 25% of the project.
At 50 million tonnes P.A it will produce 8% of Cameroons GDP.
Will qualify for world bank funding.
Has already won the contract to build and operate the iron ore port.
Capex for both rail and port look like being considerably lower than budgeted for.
20 years at 50 million tonnes pa from Mbalam alone.

Put simply there is just too much ore sitting there to be left in the ground. And thats with just what we know about so far. There is no doubt that this project is going to be worth a multiple of what it is now by the time they ship their first ore.

Whilst funding would be a concearn for a Merchant banker, I would have thought that the comming dilution of shares when offtakes and funding are announced would be more of a concearn.

The world markets are in the sittuation they are in now because people listened to Merchant Bankers.

Whilst I agree that a small "spec stock" is pushing it up hill to get funding at the moment, and that the world market turmoil is likely to last at least 2 to 3 years before we see any improvement at all, I still believe that in 2012 SDL will be worth considerably more than it is today, even if they don't start shipping until 2014 or 2015.

In the mean time trade a few here and there and build up you holding. It may go down to 7 cents, or even 5 who knows, but thats just a great opportunity in my book.

Cheers J.

 

[Singapore_Sling]

Re: aeromag data Mt Nabeba

Hi Team,
Very positive aeromag data released.
Points of note; Mt Nabeba is being compared to Mbalam.

Hello Jewels,
great news, but I can't find anything new about it!?!
could you provide a link for me/us..??
cheers

 

[quinn123]

Re: aeromag data Mt Nabeba

Hello Jewels,
great news, but I can't find anything new about it!?!
could you provide a link for me/us..??
cheers

See attachment (doesn't include plans).

My question is; how much cash does SDL have on hand and how long will it last them in the current economic conditions.

 

[Singapore_Sling]

http://www.crtv.cm/

Economy: Congolese Transport Minister comes to Cameroon
26/01/2009: Prime Minister, Inoni Ephraim has received a special envoy from the Congolese President, Denis Sassou Nguesso.
The envoy, Ousso Emile who is Congolese Transport Minister was bearer of a sealed message destined to President Paul Biya.

The envoy was accompanied to the Prime Minister’s office by the Congolese Director General of the National Civil Aviation Agency, Michel Ambende and Cameroon’s Minister of Transport, Gonouko Haounaye.

Discussions between Emile Ousso and Ephraim Inoni focused on a road construction project to link Cameroon and the Republic of Congo.

The project is expected to connect Ouesso in Congo and Sangmelima in the South Region of Cameroon.

Both parties highlighted the economic benefits of such a project and reiterated their determination to have the populations rip all economic profits from the corridor that shall be opened.

 

[Singapore_Sling]

..a bit older, yet nice:

From Minplapdat.July 2008
Container traffic that is fast increasing in the sub-region (Cameroon and its landlocked neighbouring countries namely Chad,CAR,North Congo,North DRC.
Traffic associated with transshipment and redistribution of containers along the West African Coastal area,Technical,economic,financial and environmental studies conducted reveal that the project bears a real economic interest for Cameroon and countries of the sub-region on the one hand and a financial interest for investors,business and port operators on the the other hand ,As a matter of fact,it is an over-arching and income generating project that promote sub-regional integration as well as development of industries,urban,transport and energy infrastructure sustainable improvement of the living conditions of the people.
A.4 Attendant projects to the Kribi Deep-Water Port Project.
Construction of a road linking the port to the National and International road network of the central A.
Consensual Transport Master Plan (Kribi-Ebolowa-Sangmelima-Ouesso and Sangmelima-Nola-Kisan development Corridor.

(Ouesso is in the North of Republic of the Congo about 200km from Mbalam.
Posco and their Malasian partners are looking to build a 1000km railway line from the Capital of Republic of the Congo to Ouesso.)
Construction of a railway linking the port to the National railway network.
Formulation and execution of a development plan for the commercial and industrial zone related to port..
Construction of an electric plant to supply the port and the industrial and commercial zone electricity.

 

[The Muffin Man]

Re: aeromag data Mt Nabeba

See attachment (doesn't include plans).

My question is; how much cash does SDL have on hand and how long will it last them in the current economic conditions.

At the end of the September Qtr, SDL had about $32.5m in the bank. During the September Qtr, $14.3m was spent. About $12m of that $14.3m was spent on exploration and evaluation.

The key here is that during the December period, SDL confirmed that their drilling program at Mbalam had basically finished. So you can expect the December exploration and evaluation to be significantly lower than the $12m last quarter. Purely a guess, but I reckon they will have spent maybe $5-7m this quarter, leaving a balance of $25-27m. the board is not dumb, they will not want to get involved in a capital raising anytime soon with SDL shares hanging around and below 10c, so they will conserve as much money as possible.

The other curve ball in the scenario here is the possible deal with the Cameroon Government regarding the extra 15% stake in CamIron. If the Government wants it, they have to pay 50% of development costs for Mbalam to date, if my memory serves me correctly. If a deal was to occur, that would alleviate cash concerns for even longer to come, though I have no idea as to what this figure would be?

With the $32.5m in the bank at September 30 2008, I reckon they could stretch that out to October-November 2009 at least.

 

[quinn123]

Re: aeromag data Mt Nabeba

At the end of the September Qtr, SDL had about $32.5m in the bank. During the September Qtr, $14.3m was spent. About $12m of that $14.3m was spent on exploration and evaluation.

The key here is that during the December period, SDL confirmed that their drilling program at Mbalam had basically finished. So you can expect the December exploration and evaluation to be significantly lower than the $12m last quarter. Purely a guess, but I reckon they will have spent maybe $5-7m this quarter, leaving a balance of $25-27m. the board is not dumb, they will not want to get involved in a capital raising anytime soon with SDL shares hanging around and below 10c, so they will conserve as much money as possible.

The other curve ball in the scenario here is the possible deal with the Cameroon Government regarding the extra 15% stake in CamIron. If the Government wants it, they have to pay 50% of development costs for Mbalam to date, if my memory serves me correctly. If a deal was to occur, that would alleviate cash concerns for even longer to come, though I have no idea as to what this figure would be?

With the $32.5m in the bank at September 30 2008, I reckon they could stretch that out to October-November 2009 at least.

SDL just released their Quarterly Activities report for 31st December '08. They have a cash balance of Aus 19 million at the end December 2008, and stated that expenditure will be significantly reduced due to completion of the drilling on site.
The report also stated that they have signed confidentiality agreements with 12 parties with potential interest in project off-take and due diligence is underway with some site visits in January 2009.

 

[CarbonSteel]

Quote: "Twelve confidentiality agreements have been signed with major international industry groups for review of the project. These companies include some of the world’s largest iron ore and steel producers.
Site inspections have been completed by shortlisted parties in January 2009 with technical and commercial due diligence underway. Work will focus on these negotiations in the March 2009 Quarter." Unquote.

This Quarterly Report is very welcome! However, the term "shortlisted parties" does not necessarily indicate that all twelve industry groups inspected the site........or does it? Is there something a little sinister there? I welcome the opinion of others.
:newbie:

 

[The Muffin Man]

SDL spent more through the quarter than I expected. The cash balance is a little worrying for me now.

The 12 confidentiality agreements sounds like good news, there is still plenty of interest in the project even in these current economic times.

 

[LRG]

yes, lets hope 1 or 2 of those 12 players come to the party with the $'s to make this project fly - need to see some sort of MOU announcement next or SP will start to head south again.

 

[CarbonSteel]

Worth a look...especially pp 17 - 21

http://www.aspectfinancial.com.au/d...Jyb3JwYWdlcy9wZGZkZWxheWVkLmpzcA==&popup=true

Early years cashflow should put us in a nice place. Like ... the Maldives, Tahiti, ....