ndrc - sundance tango

Responding to Andres comment yesterday that things are so complicated when asked why the Chinese OVERTLY value their African IO assets (which aren’t inconsistent with Sundance’s own valuation of the EV in production – a number derived after almost a year of discussions based on the commercial metrics, the basis of which securely funds the EPC).

I don’t think we need to overcomplicate matters at all.

This is what I strong believe is going on and it is purely (IMO).

We now have a Sundance-NDRC tango in progress (slide 14 and 21 of the Indaba presentation).

The NDRC through an official government whitepaper (of national strategy & priority) tells Sundance China is deploying special financial resources buying overseas IO resources (i.e. Mlabam-Nabeba and it WON’T be at 50% for the other half going to someone else) to address the 3 pressing and GROWING problems facing China’s steel industry (the largest in the world but has ZERO speaking rights).

Sundance tells Beijing, the resource is worth (once in production) on a commercial basis ALONE for the 2 mines at $11 Billion or $3.5+ per share. Not taking into account the economic benefits to China of unleashing a 100MTA regionally and future price negotiation leverage for China.

And if you don’t want it, someone else will.

The $11 Billion dollar question I ask is whether this is a number beyond what a western or a non-Chinese consortium deems to be marginal or uneconomical from a risk/reward proposition perspective. Perhaps IOC (a high cost 18MTA max magnetite pellet operation) being valued at $6B could provide some guidance in comparison to a $21/T DSO resource.

In any case, I reckon the announcement of a China fully negotiated asset equity bid at 100% (putting herself a distance in front) could come anytime now.