Australia's largest stock trading and investment forum Australia's #1 stock forum

SDL

Click for more information

0.00%

0.6¢ sundance resources limited

Solid support, page-35

First 35 Last

Share
Profile

Follow
Barkston

956 Posts.

1

14/01/17

00:04

Post #: 21890657
Share

Originally posted by jayneen ↑

This post follows a request from Moderator to re-post relevant content moderated above. I have edited carefully in an attempt to avoid any flame to the sensitive, but acknowledge and advise that my views below are inconsistent with at least one long term poster who holds strong alternative opinions on the project value and outcomes. The post attempts to answer the questions asked by JPS and provide reasons for comment. Very happy to conduct a respectful exchange of views with anyone who wishes to challenge any element of the post. Enjoy!
JPS,
My humble answers to your questions are:

No

N/A

Yes

Yes re DFS and Yes re the numbers have been rehashed and re-released. To be correct a "Bankable" Feasibility was not completed and never has been. A "Definitive Feasibility Study" or DFS was initially completed and announced by SDL in 2011. SDL updated these original study numbers in 2015. I prefer to use the 2011 study for reference as I am familiar with aspects having studied the detail for other purposes at the time. Please note that SDL no longer refer to any of these numbers (2011 or 2015) as they would not be allowed to under JORC as the project is no longer technically NPV positive. Also note that the DFS numbers may no longer be accurate as it was based on Government licence terms (Convention) which are no longer relevant or in force.
April 2011 DFS numbers were OPEX of US$21 (FOB) excluding royalties. The 2015 DFS was US$45 (CFR) including royalties. The 2015 number was more realistic but remains, in my opinion, wildly optimistic, and in some cases wildly inaccurate, in understating or completely ignoring operating cost items.
The "real" OPEX number (not study) would likely, in my opinion, be currently at least US$75 which is why SDL share price remains flat lined. If anyone is surprised by the jump from US21 to US45 to US75 there are factors to study on shipping costs, finance costs, new third party rail and port charges, and the changing fiscal landscape of the Convention or Mining Licence. I genuinely think I am being optimistic and generous with my OPEX estimate of circa US$75/t. In any case, as I often point out, it is a mirage as there is no railway and there is no port so it is a total dream OPEX that does not exit! I accept that other posters on this forum will disagree with my opinion and I hope they realise I am not being nasty or personal, it is just my honest assessment.

April 2011 DFS CAPEX was US$4.6 Billion. Anyone's guess what that real number is now but I would accurately summarise it as "too much to worry about".

No SDl has not investigated Direct steel making although others have. There are positive reports on the possible emergence of a local steel making industry. The SDL Convention includes commentary on an obligation to sell a % of production locally. Some have assumed this is a positive. I do not. The first reason is that there currently is no local steel making of any scale and I do belive any such activity will create a local iron ore demand as a near term opportunity. More importantly even if it does the reality is that IF there is any local demand or local steel industry it will only have been created with strong government support and possibly ownership and so what price do you think will be set for local iron ore sales? What Hotcopper readers of local news articles or the convention may not realise is that the local sales terms in the Convention are a NEGATIVE for SDL. Timber industry has the same issue in African countries – a requirement to sell product locally as a % of export. The local sales are always at a 100 to 200% discount to the export price! The same would hold true even more for iron ore when a steel industry is created that would need support to be competitive to imported steel. So local sales and local steel production is not a winner for SDL. Unfortunately. Again this view differs from at least one other long term poster. I would be more than happy to debate the position based on facts of the regional politics and industry rather than accusations. There is currently no local iron ore demand of any scale for SDL. The Convention does not provide price support for local sales and so is likely a strong negative.

Additionally, The SDL DFS work, or any work conducted by SDL, have never included, to my knowledge, any “value in use” product quality assessments. This means the actual marketability of any future ore from the SDL projects remains highly uncertain. This is not a question or reference to the iron grades quoted in the various SDL resource and reserve announcements. It is a concern of mine on the metallurgical qualities and characteristics of the ore types and how they react in any steel making process.
As always - Good Luck!

J9

Expand

This is a standout post - people inside the industry often don't get the business case and analysts outside often go skin deep on the financials only.

This nails it.

SDL Price at posting: 0.3¢ Sentiment: Hold Disclosure: Not Held
2 Upvote

0 Great analysis

Reply

Top Stories

MKT

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

JBY

James Bay latest lithium player to pivot to other metals amidst slump

WML

Woomera kicks off 2-pronged drilling at Mongolia's Bronze Fox Cu-Au play

LML

Lincoln Minerals to kick off fieldwork at Yallunda uranium project in the nuclear state, SA

QGL

Quantum Graphite snags new exploration licence in SA ahead of maiden drilling

There are more pages in this discussion • 14 more messages in this thread...

First 35 Last

Add SDL (ASX) to my watchlist