gs reduces price target and assigns a sell , page-14

HI Golddigger1

I hope you are right and they do gain finance, start production and ship in 2012.

I'm sure the so called smart money will be watching this as a recovery story along with many other stories which will develop in this sector/space.

I believe consolidation in the sector is a certainty given the P/EV valuation multiples being so low for the explorers and the forward P/E's of producers being as low as they have been for possibly this decade.

SDL will attract a certain amount of attention for sure.

My concern is that the largest shareholder has in effect a blocking stake, does not need the money to fund lifestyle or other investments and would be sure to have his eyes on a figure that is much higher than where the company's share price now resides.

The world's largest producers are also playing games with the Chinese and are currently tightening up the supply demand curve in an effort to establish more favourable forward price contracts for next year as evidenced by cuts in production from BHP, RIO and Vale. Steel mills are cutting back on production because of slower demand for product.

Who's going to pay up in this environment?

You're correct in your statement that the world needs ore to fund expansion however, what price is it willing to pay to lock in forward production?

If I was a Posco, Chinese Mill or Arcellor Mittall I'd be waiting until the Ore negotiations are settled next year as they are clearly going to be lower as everyone expects.

Do you agree?

Cheers

Belkin