capital raising, page-11

hey david,

I cant see Hanlong buying more of SDL as it would go past the 20% takeover threshhold. Hanlong are providing a blocking stake so that BHP, RIO X, Vale etc dont make a move on SDL. This paves the way for the other chinese interests to participate at project level. Very very smart way of operating here by the chinese.

The smartest move here would be that any equity issuance here is directed at international institutions looking for tier 1 assets. I am sure our board is onto that already though!

On a different note, I would think that the infrastructure most likely will not be owned by CamIron or COngo Iron.

It is likely, that SDL and the new investor would set up CamInfra and CongoInfra and own 50% each, and house the infrastructure assets in them.

CamIron and CongoIron would pay arms length freight rates to the infrastructure companies.

The main reason the infrastructure would be in separate legal entities is because there are minority interests in CamIron and CongoIron.

So, assuming SDL ends up with approx 40% of Mbalam project (40% of 35Mtpa for 14Mtpa), SDL would be free to acquire further IO projects to take its 50% share of the 100Mtpa rated infrastructure up by another 36Mtpa.

Now thats worth hanging around for.

It may not be precisely how I describe it here, but it wont be far off the mark.

HB