it gives SDL a current valuation of 40c after considering potential dilution for funding using long term iron ore price of $55
Investment Comment: Mbalam is one of the largest iron ore projects in the world not held by a major, and its development could open a +100mtpa province. Six-month share price performance is +192%, with a rerating triggered by the MOU‟s in Sep ‟10. Our valuation for SDL is A$0.71/share, based on NPV10 A$1963m with 25 years‟ production (PFS conditions, exchange 0.82, LT iron ore US$55/t at 62% Fe), plus cash. Dilution during financing (assumed 50% capex at A$1/share under current structure) could push this to A$0.40/share.
SDL Price at posting:
45.5¢ Sentiment: None Disclosure: Held
