an alternative view of hanlong

Hi all,

There has been quite a bit of ?how dare they? and ?who the hell do they think they are? said about Hanlong since the takeover announcement. But what if they are precisely the ?supportive shareholder? they claimed to be when they announced their purchase of the Talbot holding?

Recently the media, and some among us here, speculated that the negotiations with strategic partners may be stalling due to a perceived over priced buy-in figure being put forward by Sundance ? ie, a NPV of $4B means partner pays (up to) $2B now for (up to) 50% project stake and takes responsibility for 50% of debt required to fund capex. This raised the question: why would a partner pay $2B for 50% of a project when the total market cap of the parent company was less than $1B? Hanlong?s offer now makes a pretty bold response to that question. Firstly it raises the bar so that ?less than $1B? is now off the table. Secondly as we are seeing play out presently, just offering the money doesn?t guarantee you success. A potential partner who was holding up negotiations for fear of paying too much to buy in, may today be feeling like a golden opportunity is about to slip away.

We do not need a counter offer to the Hanlong bid to see the enterprise value of SDL rise. The numbers behind this project are excellent, we just need the certainty that comes with capital finance and off-take agreements. This offer will not proceed with any resemblance to its current form, of that I am certain. It will however remind people not to procrastinate. If you want in on this project then crunch the numbers and commit, otherwise move on?

I believe Hanlong have done existing shareholders a great service with this offer. They have offered a sum that puts a new floor under the SP and tells potential partners that they are not the first in line for a takeover should the finance not be as close as we think; they have given the current management team a tick of approval (I think one of the offer conditions was for current management to stay on?); they have put negotiations into the spotlight; they have remained ?friendly?; and they have increased the value of their own investment by 25% to boot. So far I say well done Peter Mansell for identifying a little bump in the road that he was able to assist with, a sign of a committed and intelligent investor.

Plus if Hanlong wanted to buy more than 19.99% they had to legally make an offer anyway ? this keeps them covered and allows additional exposure.

As a LT shareholder, a takeover was always going to be the biggest risk to achieving maximum value from this investment, but so far this is playing out well. Don?t forget Mr Jones having to go back on his word and raise additional capital after the Hanlong buy-in. That was a defensive move to ensure a blocking stake from a hostile takeover. We are in good hands and being steered by mining, finance and legal industry stalwarts. Hold tight!

Best wishes all holders,
Sth.