ozl- sfr, reading between the lines, page-34

There are fair views being expressed here on both sides however I wish to initially put a finer point of view on 2 issues. Not suggesting that $8 is the approprate price but as a reference only - OZL would pay $1B to buy outstanding SFR shares + $400m PFS Capex (SFR already owns 1st stage of accom units +++) +$100m future drilling lets say = $1.5B. (SFR has $115m cash which would offset OZL cost to date for their 18% stake). For the discussion $2B is too heavy even for a highly contested T/O
Statement that lack of recent deep drilling success is a bit "glass is half full / half empty". There has been no success because there has been no drilling - this is my big problem I have with SFR. Sept Qtrly and media releases stated start of a massive program with 5 rigs, 30 Jan it was released that 3 rigs were carrying out clean up work on previous drilling areas, sterilisation drilling etc. The only drilling of note was on an IP anolomy and an area east of Degrussa - results had not been received still. The first of 6 x 1400m +/- deep diamond drill holes had started Jan, recent notice that it had been delayed by cyclonic activity. I speculate that SFR are playing the man (OZL) and not the ball (drilling) as they feel vulnerable. As it stands the drilling program will not be completed until construction is well under way.

SFR SP was $3.20sh when OZL stumped up $4 (25% premium)- the resource to be announced shortly after from memory was 300k T, now it is circa 650k T with a JORC reserve of 415k T (excluding open pit 44k T & presumably DSO 44k T)- so SFR is a very different beast to the $4 days + PFS in place.

One thing that also needs to be considered is that OZL participated in the recent placement at $6.60, TB must have seen enough value at the price even though it was only $13m. If he thought it was overpriced he wouldnt have taken them up regardless of a slight dilution by not participating.

Nothing much has changed TB has the "whip hand" his only risk is that SFR do have immediate drilling success or that he overplays his hand - at the end of the day if anyone wants to bid for SFR, the 1st thing that will happen is that SFR will fight, 2nd - Accountants and Geo's will prove up SFRs PFS & 3rd the target statement response will conduct a peer analysis comparing SFR financial metrics with OZL, PNA, EQN. So it comes down to relativities. OZL dont have to do anything, SFR dont need to do anything (they are not in OZL's position of a few years ago - have $100m cash, clearly a funding requirement for development but they have options open to them). Keeping in mind if Armageddon occurred today - in general terms they only need to spend $150m to access 44K T direct shipping copper that doesnt need to be processed = $400m).