positives from ann

Hi All,

I will list a few positives that I extracted from today's announcement in order of importance in my opinion;

1) Finance partner to be announced this quarter. A CEO does not make an announcement with such a short time frame unless he is extremely confident of fulfilling the time line.

2) payback period 3 years and IRR 27% both on an ungeared basis. It has been discussed by mngt and analysts many times that a finance deal will look something like the GBG deal (i.e. 70/30 debt equity ratio). this will only have a positive effect on the NPV and IRR.

3) very conservative long term selling price utilised of 105c/dmtu. This is not inconsistent with the numbers being quoted from the past announcements of US$63 ton based on that scale. This is the single largest variable that can impact returns and I fully expect the price to be achieved will be way in excess of 105c considering that spot price currently is close to 300c.

4) opearating costs still extremely low at $21.20. We will be one of the cheapest (if not the cheapest) producer at an operating level. when other projects become unprofitable (if IO prices drop significantly) we will still be profitable.

5) In advanced discussions with potential finance partners. This says to me (as we have all been aware) that there are more than one potential partner and therefore it is a competitive process which allows SDL to maximise its position with the eventual partner.

6) Potential savings achievable on capital cost. As much as this project is viable as is, any savings only assist it further.

Feeling even more comfortable now that the numbers are out and looking forward to the next couple of months to view the final finance deal.
Good luck to all holders.