ann out - sdl investor presentation july 2010, page-8

Hi (qq830821),

click here to see FerrAus IP Report March 2010

http://www.ferraus.com/userfiles/file/115_2010.03.29%20ferraus%20limited%20march%20investor%20presentaton.pdf

I don't know much of FRS, but when having a quick look at their IP March 2010 report (P.2 Resources), they only have 277Mt DSO and with a lower grade than SDL. The killer here for FRS is their DSO operating costs which is $32 to $36 per tonne and this is in Aussie dollar (see a little note on bottom of P14 - FRS IP report).

Compared with SDL, where estimated Production Cost (DSO) = US$19.65/t, and using the same parity in FRS report with Exchange Rate A$0.75 to US$, we have for SDL an estimated Production Cost (DSO) around AUD$14.75 per tonne:

So FRS estimated DSO operating costs is more than double compare to the SDL one.

P13 & P14 - FRS Scoping Study
Project Payback Period: 6 to 8 years
Project IRR: 21 - 30 per cent
Product Grade: 58.5% Fe
Operating Costs: A$32 to A$36 per tonne

FRS DSO:
- 191Mt of High Grade Resource (+55% Fe)
- 85Mt of Medium Grade Resources (between 50-55% Fe)

SDL DSO:
- 415Mt at 62% Fe
- Estimated DSO Operating Costs = US$19.65/t (or A$14.75/t)

It would be interesting if Westcott could bring some further analysis on this.

Thanks,
Cheers BS

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SDL Share Price Projection (June 2010)

(always DYOR)