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What happens next?, page-389

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Pohan

720 Posts.

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13/08/19

15:21

Post #: 39977615
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Originally posted by Buffet101 ↑

This is a very interesting investment opportunity, which is far more likely to be developed, this time round for lots of valid reasons, but specifically:
1. Dave Porter has stitched together a credible development consortium that has a track record of Project funding and developments that eliminates the question of capability; this consortium is Bankable in the true sense of the phrase;
2. The high quality of the ore is required by Chinese steelmakers as a replacement and substitute for lower grade ore currently being supplied ex Australia. As the quality of Australian ores continue to decline the need to replace Aust Fe with higher quality ore with less contaminants (specifically increased levels of P and Al203) make the Project economics more compelling. This combined with a development team that understand the importance of maximising the economy of scale (think a minimum of 45tpa which the proposed rail and port can accommodate) will in turn produce a very attractive IRR. Unfortunately this is something that the previous Board did not understand, whereas this development team definitely does;
3. The current US/China trade war is going to drag Australia into a position that it has been desperately trying to avoid, but with Josh Frydenberg clearly stating that Aust will follow the US regardless of the pain, its not rocket science to work out that the Chinese will be looking to source as much raw materials as they can from alternate sources to Australia, in retaliation (just ask the Soybean farmers etc in the US and Canada).
4. Logic dictates that a combination of the three points above have moved this Project from Whoa to Go subject to Govt support.

In summary, if life is all about luck, tenacity and timing then SDL shareholders are going to be in for an interesting ride!

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@ buffet 101.
Good post Sir
All your 3 points are practical and correct, it just takes a long time for all the stars to line up..
Waiting ,Waiting, Waiting.

SDL Price at posting: 0.6¢ Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

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What happens next?, page-389

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