mick davis....i'm just saying is all

Here is something to think about.

Mick Davis was the former CEO of Xtrata who was out of a job after the Glencore Xtrata merger. In 8 years he transformed Xtrata from a 500 Million MC company to a 50 Billion MC company. Before that he was the CFO that helped create Billiton. He was instrumental in re establishing London as a centre of mining finance. In one article I have read he is now hoping to similarly make South Africa a centre for African mining finance.

In May 2013 articles started to emerge that Davis was looking to build another mid tier mining company. This would be X2 resources. One such article from May can be found here:

http://www.mining.com/big-mick-davis-and-goldman-sachs-readying-takeover-war-chest-34362/

Note two statements that are set in bold print are:

1. should Davis go for a blockbuster takeover right away he would find a sympathetic ears among shareholders

2. China's on a $40bn+ mining acquisition spree around the world that has not gone quite as well as it should and someone with the dealmaking chops and execution ability of Davis could be worth a lot to China.


Now fast forward to the 27th Sept 2013. Noble Group and TPG Capital each tip in 500 mill into the new X2. This amount coincidentally happens to be how much capital SDL will need for the mine level of their project. From what I can gather through google it took about 3 days (30th Septh 2013) for the Noble /X2 deal to really hit the news wires.

Two days later on the morning of Oct 2nd SDL hits a low of 6.9c. Later that day George Jones speaks at the RSS conference on the Gold Coast. SDL has a sharp recovery by market close as one would expect to see after a ra ra presentation. However, unlike as is the case with all the other presentations this rally was not a one day wonder and in fact SDL began a relentless climb and MORE THAN DOUBLED in market cap by 22nd Oct when it was announced that Noble had taken their 20 mill stake along with the other consortium.

Now here in the present day we have a situation where Noble has agreed to take UP TO 100% off take BUT will hand over 50% of that to a potential equity partner.....you can see where this is heading, can't you?? But let me spell it out I am suggesting that X2 is the likely equity partner and this will give Noble indirect exposure to mine equity via X2

So let's summarize:

1. Mick Davis, whilst not saying directly, is clearly interested in African assets. This is confirmed by his stated desire to make South Africa the centre for African mining finance just as he did with London and Billiton. I sourced this particular snippet from the last 2 paragraphs of this article: http://www.miningweekly.com/article/mick-davis-and-team-get-going-again-as-well-backed-x2-2013-09-30

2. another article states in bold these 2 facts

i. should Davis go for a blockbuster takeover right away he would find a sympathetic ears among shareholders

ii. China's on a $40bn+ mining acquisition spree around the world that has not gone quite as well as it should and someone with the dealmaking chops and execution ability of Davis could be worth a lot to China.

3. Noble and TPG capital tip into X2 the amount needed by SDL at the mine level on 27th Sept 2013.

4. a few days later after a low of 6.9c SDL begins a relentless climb and more than doubles in value by 22nd Oct when it is "officially" announced that Noble have made a 20 mill commitment to SDL for working capital

5. Noble agrees to 50 to 100% offtake with up to 50% being allowed to be clawed back for an equity partner

6. SDL is a strategically important deposit. Only through SDL will the necessary infrastructure be put in place. He who controls SDL and the infrastructure controls the region. What I am suggesting here is that for someone like Mick Davis the story would not end here. He could use his "dealmaking chops and execution ability" to consolidate other IO interests along the rail line into his new company. I could possibly foresee that over the next decade that, under someone like Davis, the new X2 could become the Rio Tinto of West Africa.

I read an article last year which I can't find now that suggests what West Africa needs is a "Twiggy" to champion the cause of coordinating and consolidating all the bits and bobs of iron ore deposits. I think Mick Davis might fit the bill of a "Twiggy"

I will just conclude by saying that this is all conjecture on my part and I am just putting the case forward for a SDL/Noble/X2 partnership.