one day to go!!!, page-26

unhedged, SDL doesn't have a massive OPEX, it's currently measured at $19.65pt which one of the lowest in the IO industry. SDL is aiming to be a low cost producer. Also, you need to measure CAPEX relative to free cash flows per year, otherwise the figures are meaningless.

For example, AVI is looking at a CAPEX payback period of ~ 3 years for it's project. The CAPEX is being measured at $160m.

SDL is looking at a CAPEX payback period of 4 years using $65 as the sale price achieved per tonne.

Relatively speaking, the CAPEX payback periods are very similar. You must take into account projected free cash flows when analysing CAPEX otherwise it's meaningless. Running around shouting "OMG, $4Bn!" is meaningless when you don't add, "but free cash flows of $1Bn per year meaning a CAPEX payback period of 4 years!"

A project that has a CAPEX of $100m and free cash flows per year of $10m is far less attractive than a project that has a CAPEX of $4Bn and ultra conservative free cash flows of $1Bn per year. I wonder if you understand this? It doesn't seem so, or you would be just as worried about the CAPEX faced by AVI as the payback periods for the capital outlays look very similar.