SDL - Sundance Resources

[jonojpsg]

Dilution? Last I heard a consolidation was well and truly on the cards- GJ as good as said so a few months ago...

Doesn't mean there won't be dilution...just because there are only 270m shares instead of 2.7bn just means they only have to issue another 100m shares to raise $300m rather than 1bn shares...still the same dilutionary effect.

Would definitely expect to see more shares issued, though hopefully the SP will move up a bit more yet before that happens, if they can put out a few more announcements such as Mbalam Convention, perhaps offtake deal?, BEFORE financing/share issues then we might see 50c by then which would halve the amount of dilution that we would have seen just a month or two ago

 

[snowking]

Kind of been following this stock for a while, have it in a watchlist but havent had enough time to do my own research.
But for all you holders out there, you may be interested to know that Southern Cross Equities have initiated coverage on the stock and there 12 month target price is 77 cents per share

 

[mr. jeff]

SDL put out an ann. in reply to ASX query, about speculation particularly from HC and a Turkish paper printing a misleading article which was then posted there. Also further speculation from AFR on the funding for development making progress....
Where there's smoke there's fire. Sometimes.

 

[CarbonSteel]

SDL put out an ann. in reply to ASX query, about speculation particularly from HC and a Turkish paper printing a misleading article which was then posted there. Also further speculation from AFR on the funding for development making progress....
Where there's smoke there's fire. Sometimes.

Just who is AFR?
This is beginning to take shape. Have been in this stock from the 7.5 cent days but not ready to sell yet. Looking like there's a way to go, hopefully upwards!

 

[thestevo888]

Just who is AFR?

AFR= Australian Financial Review, I think... Interesting thing about the announcement Sundance put out is that the sp remained steady for several hours afterwards... obviously many believe the fire/smoke correlation. Time will tell.

 

[nioka]

Where there is smoke there is fire. Big volume today and big volume after the announcemant too. Many are expecting that sort of announcement and it probably will come. The company must be in delicate negotiations and it is possible that there are some loose tongues. Foreign news reports are easily misinterpreted when translated and there could be some knowledge behind the report. One report had the following quote;

"Sundance Resources of all executives to take a private plane crash inspection Mbalam, Mbalam project again variable."

"Private plane crash inspection" Hard way to test for iron ore.

 

[CarbonSteel]

Interesting that in reply to the question from ASX, SDL explained that negotiations with prospective partners are in a "preliminary" phase, yet in quarterly reports and annual reports in recent months these negotiations were "advanced".

 

[jonojpsg]

Interesting that in reply to the question from ASX, SDL explained that negotiations with prospective partners are in a "preliminary" phase, yet in quarterly reports and annual reports in recent months these negotiations were "advanced".

Noted that too Carbon!! Perhaps they were just trying to ease off any perceived pressure on potential partners so there was no adverse effects on negotiations?

 

[LRG]

oh well it touched 38 c today and closed at 37 c - a new high for the last couple of years. trend is your friend and trend is definitly north in the last 3 months. high volumes still.

will we see 50 c + by years end as predicted a few month ago by lioness?

maybe, maybe more - who knows?

the momentum seems to be well and truly to the positive - i am very happy with the status, certainly compared with 12 months or 2 years ago. I bought SDL from 45 cents all the way down to 7 cents (as I have said before) my avg price was around 16 cents, so I spent many many months in the negative, now however I am finally in the black with IMO little prospect of the project and the share price falling back significantly or not proceeding.

the management seem to have the smarts to bring this venture to fruitin in 2011.

anyone attend the AGM today in Perth - Ithink it was today???

 

[zmalecki]

Hello,
There have been various calc's on this forum estimating the SP from $4.55 to $10 +. Can anyone update the SP forecast based on the new data provided by SDL?
At least we have some news

Hi guys.
It is niece to see old and new friends on SDL page.
Since forecast 4.55 was my, and already passed half a year since last one, pleases find corrected one.
Basically, end result is similar.
Please fell free to correct and factors and calculate it by your own.

How it looks now ??
1. Outstanding shares - no change 2.8 bln
2. $ is weaker (from 1.07 -> 1.02 USD/AUD (5% down)
3. price for iron ore stable 160USD/Dmtu FOB China

And how looks calculation now ?

let assume 30 MT @ 132.75 FOB (160$-27.25$ see http://www.mbironoreindex.com/ )
=3982.5 mln$ /year
Pre production 3.36 bln$ -> c.a. 672 mln$/year cc
- 672 mln$ year capital cost
- 590 mln$ operation (19.65$/T)
- 295 mln$ amortyzator
------------------------------
1575 mln$ yearly

3982.5 mln$ (revenue)
-1545.0 mln$ (costs )
--------------------
2525.5 mln$ EBIT

Now.
What might be a number of outstanding shares when starting production ??
As of today market capitalisation is 2.8 bln * 0.37 = 1.036 Bln AUD = c.a. 1.01 Bln USD

SDL Must have:
560 Mln USD Contingency
20% of outstanding shares to Camerun & Congo governments
X% of outstanding shares for someone who will organize financing
my qualifieg guess is that it might be round 500 Mln is shares (of course payied in cash)
( I saw similar deal in 2008)

Now what SDL need is good news from gvmt Cameroon related to convention & time.
This to things shall push price of SLD still higher.
let assume that by end of year / jenuara price will go to 0.5 AUD/share

At the end of a day SDL will issue from "sponsor" and Cameroon GVMT
Sponsor 500 MLN/0.5 = 1.00 Bln shares
Cameroon gvmt = 0.56 Bln shares
Contingency 560 Mln/0.5 = 1.12 Bln shares
-----------------------------------------
Total nwe shares = 2.68 Bln Shares

In total we will have c.a. 5.5 Bln outstanding share

So

2525 mln$ EBIT$

from other hand 5.5 bln outstanding shares and options.

But issuing shares SDL will receive money, so in consequence
thay need to borrow not 3.36 Bln USD but rather 1 Bln less = 2,36 Bln USD

in thi case EBIT will be higher about 1 Blb / 5 years = 200 Mln yearly

So in consequence EBIT = 2525 + 200 = 2725 Mln$

EPS = 2725mln$/5,5bln shares = .495$
Taking to acount current price -> PE ratio = .37/0.495=0.75

let assume in production PE retion in area 10 (think not to much)
it leads us to :
TPIR (Theoretical Price Increase Ration) = 10 (target PE) / 0.75 (Current) = 13.33
So in theory target ptice = Current pricr * TPIR = .37 * 13.33 = 4.93 AUD

Please keep in mind that price is calculated taking into account repayment of
costs of financing in first 5 years of production.

I'm still in.

And I even if lake of Mbarga in 2043 will be worth less than .15AUD/share
I will have my yacht on it . What about you guys ?? , CarbonS ?

 

[nioka]

Zmalecki,
I like you method for calculating the share value. I have seen so many calculations done without taking into consideration the cost of financing the companies activities between now and the first sale proceeds. Those costs are still not clear in my mind. The costs of ports and rail facilities to SDL are not yet defined. These have to be paid for before any sales can be made. If these are owned and paid for 100% by SDL then there may be a high dilution factor to consider.

I'm suggesting this may be higher than you allow. Maybe twice the amount that you have suggested. Maybe I am too conservative. The Chinese will want a stake in the company in return for financing. they are renouned for hard dealing in these circumstances.

 

[zmalecki]

Zmalecki,
The costs of ports and rail facilities to SDL are not yet defined. These have to be paid for before any sales can be made.
in these circumstances.

Nioka,
This costs are included in my calculation.

3.36 Bln it is (SDL presentations)
Mine & Plant US$ 358m
Rail US$1,472m
Port US$ 505m
Indirects US$ 465m
Contingency US$ 560m
--------------------------------------------
TOTAL ESTIMATED CAPEX (PFS)3 US$3,360m

But I agree with you. Some factors we still do not know.
From other hand out of todays presentation we see that SDL is trying to gain time. It move some milestone from December 2010 to end of Q1 2011.

And finally it is better to calculate something than not

 

[LRG]

Nioka,
This costs are included in my calculation.

3.36 Bln it is (SDL presentations)
Mine & Plant US$ 358m
Rail US$1,472m
Port US$ 505m
Indirects US$ 465m
Contingency US$ 560m
--------------------------------------------
TOTAL ESTIMATED CAPEX (PFS)3 US$3,360m

But I agree with you. Some factors we still do not know.
From other hand out of todays presentation we see that SDL is trying to gain time. It move some milestone from December 2010 to end of Q1 2011.

And finally it is better to calculate something than not

So zmalecki

Whith your calcs it is not clear to me the timeframe when you believe the estimate of $4.93AUD will be achieved along the timeline

is it 2014? after or before?

 

[Pythagerous]

G'day All

I've just returned back to Sydney from Perth, and the main things that I took out of the AGM include:

- Mbalam convention will happen around or leading up to DFS

- The Board are quite intent on owning and controlling the railway.

- Board members haven't had a window of opportunity to buy shares and may not get one until a deal is done.

- Deutsche Bank are no longer advising SDL and haven't been for some months.

- GJ was confident that the Cameroon Government would take up a 10% stake of the project (not Sdl)

- The new CEO relinquished an attractive bonus package at his previous job to join SDL

- GJ stated that interest in the project was strong as was the global demand for iron ore. He was confident (as is RIO) that supply for Iron Ore won't catch up with demand until around 2018 if at all.

- GJ stated that if IO prices remain the same as today that it will be paid of in 12 months instead of 4 years

- GJ understood concerns in relation to consolidation and said that any consolidation would only happen during a major financial transaction being done.

- Any delays in the signing of the mbalam convention are not due nerves of the Cameroon Government but due to the amount of documentation that needs to be prepared and finalised.

- The DSO that Sdl has is very easy to access.

- There has been no drilling results as they have been focusing on defining indicated resources.

On top of the above, I came to the conclusion that the new CEO is the right man for the job and that the Australian Shareholders Association will never be satisfied after a member representing them questioned and disagreed with just about every proposed resolution put forward.

 

[Axel]

Nioka,
This costs are included in my calculation.

3.36 Bln it is (SDL presentations)
Mine & Plant US$ 358m
Rail US$1,472m
Port US$ 505m
Indirects US$ 465m
Contingency US$ 560m
--------------------------------------------
TOTAL ESTIMATED CAPEX (PFS)3 US$3,360m

But I agree with you. Some factors we still do not know.
From other hand out of todays presentation we see that SDL is trying to gain time. It move some milestone from December 2010 to end of Q1 2011.

And finally it is better to calculate something than not

Zmalecki, Hi new to this forum, been following SDL ...I was fascinated by your calulations... One question which I wanted you to clarify if possible...Is the $4.93 sp you've calculated based on dilution? That is, I've read SDL are going to reduce the number of shares on offer, eg say 1 for 10 shares held. So is the $4.93 based on the 1 or 10 shares? Currently, the sp is around 0.38, which would make the sp approximately $3.80 if number of shares held were reduced? Thanks

 

[Sean K]

In total we will have c.a. 5.5 Bln outstanding share


So in theory target ptice = Current pricr * TPIR = .37 * 13.33 = 4.93 AUD

I've really got no idea how you've come to 4.95 with all those calcs, so you've achieved your aim.

5.5b shares @ $4.93 = $27b MC or thereabouts.

That's when they're actually delivering the 40Mt isn't it?

FMG currently about $14b MC I think.....already producing about 40Mt, aiming for 150Mt.

Something's amiss here

Hmm

 

[jonojpsg]

I've really got no idea how you've come to 4.95 with all those calcs, so you've achieved your aim.

5.5b shares @ $4.93 = $27b MC or thereabouts.

That's when they're actually delivering the 40Mt isn't it?

FMG currently about $14b MC I think.....already producing about 40Mt, aiming for 150Mt.

Something's amiss here

Hmm

Essentially kennas it's just a simple assumption of PE of 10 based on earnings of $2.7bn, or $27bn MC. When you look at the comparison with FMG it shows potentially that FMG is pretty seriously undervalued? Surely FMG must be raking it it atm, costs of $50/t and price of $150/t giving them $4bn a year AND as you pointed out, looking at upping that to 150MT a year

Altho when you look at FMGs financials, their net profit last year was only $700m, so in reality SDL will probably end up well below the $2.7bn estimated by zmalecki. Let's say more like $1bn a year (lower costs than FMG) then a PE of 10 would make their MC $10bn with 5.5bn shares gives a price target of $1.80 by 2014 which is more like it.

I'm happy to aim for $0.75 by mid nxt yr myself

 

[jonojpsg]

G'day All

I've just returned back to Sydney from Perth, and the main things that I took out of the AGM include:

- Mbalam convention will happen around or leading up to DFS

- The Board are quite intent on owning and controlling the railway.

- Board members haven't had a window of opportunity to buy shares and may not get one until a deal is done.

- Deutsche Bank are no longer advising SDL and haven't been for some months.

- GJ was confident that the Cameroon Government would take up a 10% stake of the project (not Sdl)

- The new CEO relinquished an attractive bonus package at his previous job to join SDL

- GJ stated that interest in the project was strong as was the global demand for iron ore. He was confident (as is RIO) that supply for Iron Ore won't catch up with demand until around 2018 if at all.

- GJ stated that if IO prices remain the same as today that it will be paid of in 12 months instead of 4 years

- GJ understood concerns in relation to consolidation and said that any consolidation would only happen during a major financial transaction being done.

- Any delays in the signing of the mbalam convention are not due nerves of the Cameroon Government but due to the amount of documentation that needs to be prepared and finalised.

- The DSO that Sdl has is very easy to access.

- There has been no drilling results as they have been focusing on defining indicated resources.

On top of the above, I came to the conclusion that the new CEO is the right man for the job and that the Australian Shareholders Association will never be satisfied after a member representing them questioned and disagreed with just about every proposed resolution put forward.

Thanks a lot pyth for your input, much appreciated Definitely looks positive going forward!

 

[polska]

Good rise today, I got in @ 0.355 last week, an announcement is surely near, would be a nice little x-mas present if it hit 50c+ for us holders.

 

[ocelot]

well its broken the .40c mark alot of trades today. I have started to see alot more press about this project. I think the word is getting out again about this one. I doubt it will be .50c before Feb.