Ann: Capital Raising and Project Update , page-16

Hi Klob

Fair enough. I would have to agree with a fair bit of what you have had to say about the funding. I have posted on other threads that my area is banking and being in WA most of that revolves around project financing in the resources sector. We are not touching any projects at the present time and are pretty much flat out closing down most of our existing clients in one way or another. Funding is on a very tight leash at the moment and therefore from what I am seeing there is no way in the next 12 months SDL will obtain outright financing for the project.

Their only hope is for a strategic partner with cash to pump in which may involve some sort of off-take agreement, and no doubt a fair bit of shareholder dillution. How this affects the SP I am not sure but there should still be plenty of potential up side depending on the structure of the deal.

If their cash reserves enable them to extend/delay further progression of the project until the global market returns to some sort of normality IMO this will assist the eventual outcome of the deal. Despite the SP tanking in the short term i think a delay in the financing will in the long run benefit shareholders. This project must be on the radar of steel producers looking to control decades of high-quality ore at discounted prices, and given the current conditions negotiations would be highly in their favour. The board will be hard-pressed to get the best possible deal at the moment. In 12-24 months time, maybe the tables will have turned but SDL must last out the storm.

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