Sphere have been working with Xstrata, prior to the bid, on ways to develop the project without the Startup Phase. ie, go straight to 6mtpa rather than staging.
Going straight to 6mtpa brings cashflows forward and enhances the project NPV substantially.
There is no doubt that Xstrata have a very gopod handle on project economics. A much better handle than the anaylsts covering the stock.
This is a +$4 stock. SPH are worth more than $500m.
But.
Note that the Chinese objective is for the Xstrata bid to fail. It is not the primary objective of the Chinese to gain control. Should the Xstrata bid fail do not be surprised if the Chinese proposal takes an extremely long time to get up, or not get up at all.
To clarify: I am bullish SPH and do not intend to sell at $3.00. But I also recognise the Chinese strategy is not necessarily to counter bid for control. The Chinese simply don't the world's major mining companies controlling supply or iron ore.
SPH Price at posting:
$2.94 Sentiment: Hold Disclosure: Held
