SDL - Sundance Resources

[The Muffin Man]

I don't think it has anything to do with the Government, it's a piece of work sanctioned by the company. It will be finished by 31 March, then I'd assume would have to be looked over by the board and a release to the ASX created. I'd say that would take about a week, so expect the public announcement from 7th April onwards.

I personally think a lot of the DFS information will be built into the share price already, and we may only see a small rise to, say, 50c.

 

[jonojpsg]

I don't think it has anything to do with the Government, it's a piece of work sanctioned by the company. It will be finished by 31 March, then I'd assume would have to be looked over by the board and a release to the ASX created. I'd say that would take about a week, so expect the public announcement from 7th April onwards.

I personally think a lot of the DFS information will be built into the share price already, and we may only see a small rise to, say, 50c.

Hey muffinman, tend to agree, although am hoping you're not right!! Main things I can see that potentially might come out that will move the SP is either possibility of higher output, eg 50MT rather than 35MT, and should DEFINITELY be higher assumed IO price long term, as their last study put it at $65/t which I don't think anyone is forecasting now? Give their very low cost of actual production ($20/t maybe a bit higher now), a $5 or $10/t improvement in price would go straight to the bottom line.

Hoping for 55c post release

 

[adobee]

heap of media and press latelty about China looking to break the australian io cartel and there heavy investment in Africa.. China hoping to take 50% of market out of Africa in the next five years.. This media should be positive for the likes of SDL, AVZ and other African miners.. Majority a regurgitation of David Hales Comments .. video of interview on lateline http://www.abc.net.au/lateline/

 

[nioka]

More good news for SDL shareholders from
http://www.businessspectator.com.au...es-China-mills-for-F9FXX?opendocument&src=rss

It will only be good news if SDL only suffers reasonable share dilution and it's potential partner doesn't get dominance over the company. There is a lot of time and money needed before any iron ore is sold. The company structure may change dramatically before then. I do hold a fair number of SDL which I bought at the very bottom. It was a great buy then but it will not repeat some of the performances by those iron ore companies that started production in time to take advantage of the shortages experienced recently which should continue for another year or two. These have been boom times and the boom will continue for a little while. My strategy is to get in during the bad times but exit before the boom ends. I doubt that I will hold SDL when it is a producer.

 

[mr. jeff]

Was a star, now a chihuahua. Short term chihuahua.

If I could put the construction bill on credit and take a swipe of the profit, I would. But my limit is about 3000x under that needed. (3000 keen holders however...)

It seems that there must be something up with negotiations, there has been little decent info out from SDL for quite a while, media now repeating things. Although that 15.95% swipe could signal a change in the SP trend.
If you use your bullish imagination this could be a good place to buy in anticipation of a few decent upcoming possibilities.

The first stage of Sundance's project, consisting of two separate deposits in Cameroon and neighbouring Congo, a 480 kilometre railway and a port, will yield 35 million tonnes of iron ore a year for 10 years, according to Casello.

That's still less than the production plans outlined by some of the other challengers to the sector's majors.

South Africa's AngloAmerican is aiming to double its iron ore production to 80 million tonnes a year in about three years and Fortescue wants to be mining 155 million tonnes by mid-decade.

A final study by Sundance detailing the costs and logistics of the project will be completed by the end of this month, Mr Casello said.

Private Chinese exploration company Hanlong Mining bought an additional 15.95 per cent in Sundance this week, making it the largest shareholder with 19 per cent.

The volume they want to ship looks small in comparison to upcoming plans from majors, and perhaps the IO supply/demand will have evened when SDL is ready for first shipment; then the investment may be less attractive than a less capital intensive earlier delivery one. We will see what px says.

 

[jonojpsg]

Will be interesting to see how trading goes this week in anticipation of the DFS release - will it be the usual high volume up day(s) prior to the release as the news filters out ahead of the official release

Already a bit more buying interest this morning, which makes sense given that release will have to come in the next couple of days.

 

[kingcarmleo]

thetradercentral has an article about SDL today.

 

[Sirbill]

thetradercentral has an article about SDL today.

Broker Valuations

Southern Cross Equities: Target – $0.81
GMP Securities: Target – $0.75
Bell Potter Securities: Target – $0.72
Stonebridge: Target- $0.66

It is important to note after the definitive feasibility study is released to market, valuations are likely to increase significantly.





The most important part of that article

 

[talktome]

***DFS has been released***


PDF attached.


Main Points:

Stage One capital expenditure of approximately US$4.6B.

Capital payback projected to be achieved in three years.

Cash operating costs, pre-royalties, of US$21.20 per tonne for Stage One.



Other:


The DFS covers all aspects of Stage One including the geology, mining, infrastructure, engineering,
construction and economics as they relate to development and production. The DFS now forms the
basis for capital appropriation and will provide the budget input for the Project to move forward to
a Final Investment Decision.


SDL CEO - “I would like to take this opportunity to congratulate our team on delivering this excellent result.
We are all now focused on moving ahead as rapidly as possible to secure final approvals and obtain
project funding to enable us to commence construction later this year."


First ore on ship anticipated in the last quarter of calendar 2014, positioning Sundance to become a significant global iron ore producer.


Discussions with potential strategic partners are progressing well and we look forward to concluding these discussions in the first half of 2011.


Sundance Resources looks forward to Final Investment Decision and the start of construction before the end of the year.


Talktome

 

[jonojpsg]

Yep, looks good

Costs have risen since PFS BUT importantly most of that is extra for Nabeba mine/rail and only minimal cost rises over last year and a half. Now if this project was in Oz they'd be looking at 30%+ cost increases over that time, so it's not too bad.

No average IO price given, but on rough calcs over 25 years at 35Mtpa gives 875Mt total and total revenue was given as $99B, so on that basis averages $113/t which seems reasonable.

Impact on SP may be minimal given that no real surprises - have to wait for partner/financing to be finalised before we see gains towards $1 IMO.

 

[RaymondJ]

Yep, looks good

Costs have risen since PFS BUT importantly most of that is extra for Nabeba mine/rail and only minimal cost rises over last year and a half. Now if this project was in Oz they'd be looking at 30%+ cost increases over that time, so it's not too bad.

No average IO price given, but on rough calcs over 25 years at 35Mtpa gives 875Mt total and total revenue was given as $99B, so on that basis averages $113/t which seems reasonable.

Impact on SP may be minimal given that no real surprises - have to wait for partner/financing to be finalised before we see gains towards $1 IMO.

I agree with you the financing contracts are the key to this. I thought there might have been more about that in the latest release.

 

[Billyjoel]

I don't think it has anything to do with the Government, it's a piece of work sanctioned by the company. It will be finished by 31 March, then I'd assume would have to be looked over by the board and a release to the ASX created. I'd say that would take about a week, so expect the public announcement from 7th April onwards.

I personally think a lot of the DFS information will be built into the share price already, and we may only see a small rise to, say, 50c.

Hi Muffin Man, DFS is release through Comsec. Not up on SDL site yet? Its positive. Not a lot new though. Good bit is ...'move ahead as quickly as possible...final approvals (gov)...project financing...commence construction later this year'. IO priced in model is at $105 which is positive. Wait and see how the borkers interpit the DFS I guess. bj

 

[CarbonSteel]

It will only be good news if SDL only suffers reasonable share dilution and it's potential partner doesn't get dominance over the company. There is a lot of time and money needed before any iron ore is sold. The company structure may change dramatically before then. I do hold a fair number of SDL which I bought at the very bottom. It was a great buy then but it will not repeat some of the performances by those iron ore companies that started production in time to take advantage of the shortages experienced recently which should continue for another year or two. These have been boom times and the boom will continue for a little while. My strategy is to get in during the bad times but exit before the boom ends. I doubt that I will hold SDL when it is a producer.

I think I will hold SDL when it is a producer, chiefly because I have seen the gain and gain of FMG after becoming a producer. I too, bought SDL at an average 10.2 cents, so it owes me nothing. The question about continued demand for IO is somewhat vexed, but SDL CEO has today said that prices will continue to be strong for some time. By that, I gather that he is talking about more than 2 - 3 years. I must admit that I tend to agree, given that we have 1.3 Bn people in India and a similar population in China. All these people will want cars, homes, commercial and industrial buildings over the next 10 - 15 years as they become more affluent. That does not take into account other developing nations in the Asian and African regions. I think there will be rise upon rise for IO as we try to satisfy the demand of almost 40% of the worlds population over the next decade or two.

 

[CarbonSteel]

Broker Valuations

Southern Cross Equities: Target – $0.81
GMP Securities: Target – $0.75
Bell Potter Securities: Target – $0.72
Stonebridge: Target- $0.66

It is important to note after the definitive feasibility study is released to market, valuations are likely to increase significantly.





The most important part of that article

Didn't happen unfortunately. I expect the next milestone is finance/offtake agreements and the respective governments tipping in their share ( 50% of costs to date) to secure their 10 - 15% (can't remember) as per the original agreement. Maybe at this point we will see a little more enthusiasm?:jump:

 

[CarbonSteel]

I don't think it has anything to do with the Government, it's a piece of work sanctioned by the company. It will be finished by 31 March, then I'd assume would have to be looked over by the board and a release to the ASX created. I'd say that would take about a week, so expect the public announcement from 7th April onwards.

I personally think a lot of the DFS information will be built into the share price already, and we may only see a small rise to, say, 50c.

Absolutely spot on Muff! Love ya work mate!

 

[LRG]

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 ?

hello
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.

So Z

with the latest DFS out today I would be very interested that you redo your calcs again and come up with your estimate of the FUTURE share value in 2014/15 come production.

Todays report suggested to me:
NPV = $4.3B US divided by 2.8B shares = $1.54 per share present value.

Therefore I am a bit confused why the share price did not rally a bit today on the news.

The market just seemed to dismiss the DFS today anyway.

Maybe there will be more rises ovwr the days to come as news filters out.

But, does not look like any significant gains are in the wind until finance is line up by june july.

also construction commence is now not 3rd qtr but by end of 2011.

patience is definitely the key with this one as timeline keeps getting stretched out.

 

[Billyjoel]

I am sorry yet when I read your post I do not know why, I find myself taking on a scotish accent.

I disagree with your figures.

Thus I disagree with your argument.

Thus I disagree with your total position.

No offence inteded.

SDL is still a good investment. Fear aside.

bj

 

[pegasus9]

Hi Muffin Man, DFS is release through Comsec. Not up on SDL site yet? Its positive. Not a lot new though. Good bit is ...'move ahead as quickly as possible...final approvals (gov)...project financing...commence construction later this year'. IO priced in model is at $105 which is positive. Wait and see how the borkers interpit the DFS I guess. bj

The price quoted in the DFS is 105c / dmtu. one dmtu is equal to 1% FE per tonne of ore... therefore at 66% FE the price used is 66 *1.05 or about $69 per tonne. This would seem to be a very low price to use in todays market. How much better would the DFS had looked if it had been a price of $105 / tonne.... Hopefully the analyst will pick this up in their valuations....

 

[mr. jeff]

The price quoted in the DFS is 105c / dmtu. one dmtu is equal to 1% FE per tonne of ore... therefore at 66% FE the price used is 66 *1.05 or about $69 per tonne. This would seem to be a very low price to use in todays market. How much better would the DFS had looked if it had been a price of $105 / tonne.... Hopefully the analyst will pick this up in their valuations....

coverage in fin review today, DSO @ 63.6% and operating costs $21.20 / t ; 3 year pay back period. 3 years! Assuming the build costs are realistic.
May have underestimated SDL's chances at cracking the big time.

There was also a Street Talk comment, "Xstrata adds a groovy Sundance Twist" discussing the possible attractiveness of SDL to Xstrata now that the DFS has been completed and released. There may be a grab to come and whether this becomes reflected in the SP we will see.
Looking at the chart
it could be suggested that if the current positive movement continue in the general market, SDL may start thinking about recovering its past price top, where we had no DFS, but were expecting the announcement of a capital agreement and expecting further news. Good luck.

 

[adobee]

SDL now advertising on the radio ??? Sure the advertisement said production 2011...
DO they need more market exposure to get this moving by mums and dads .. surely not ..