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26/01/16
22:29
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Originally posted by jayneen
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Westcott,
Badondo is 100km closer to the ocean than Mbarga. Have a look at a map!
I do not believe you are correct in claiming EQX will have to truck ore along a "track" "which will have to be built" to get to SDL's rail corridor.
What you seem to be ignoring is that what needs to be built for this fanciful proposition to have even passing validity is SDL's RAILWAY!!! nobody is considering building a track to a "corridor". There currently is no SDL railway and there seems very little chance of there being one anytime soon.
Have you considered why it is that EQX Management, as well as Core Mining, have always believed a far more viable export solution for Badondo and for Avima is via **on?
Badondo is on the doorstep of Belinga which is the largest DSO project in the region and the project the closest to the coast and the logical "major tenant" of any new infrastructure.
The **onese government have committed to building a railway to Belinga. Even better there is an existing Trans-**on railway which already handles bulk commodity (manganese) and leads directly to a port.
SDL followers seem myopic in their view of the regional infrastructure solutions.
Personally I do not believe that ANY of these projects will be developed for at least 10 years and maybe more. However if and when there is regional development it seems obvious to me it will be based around the largest resource regional base and the most obvious infrastructure solution.
That said, as an EQX holder I hope that SDL are successful and built a real railway in the current fictional corridor. It would be great for the region and be a huge boost in value for EQX.
On this point and your last point I do not agree with your assessment of investment risk between EQX and SDL.
On the downside:
- if SDL's projects are seen as, or become, worthless (a realistic proposition in the current iron ore market) then share price is zero as the $85 debt explodes the company. (As you may know I personally believe IMO this has been the most obvious outcome since about 12 months ago.)
- if EQX projects are seen as, or become, worthless (a realistic proposition in the current iron ore market) then the company becomes a shell, and as you yourself say above, the market cap is likely to be re-rated on the basis of the remaining cash. In this circumstance we both agree that if EQX abandon their iron projects the share price would likely go up to 35c!
SO downside for SDL is a share price of zero. Downside for EQX is roughly current share price of 23c which is $10million BELOW cash backing.
I am a downside focused investor so I am very happy holding EQX (as I see little downside) and would sell any SDL I had immediately as I see a likely 100% loss scenario.
On the upside:
- If SDL recover and fund their projects and build a mine and railway and port and have a market cap of $1 BILLION without ANY share holder dilution WHATSOEVER from current position (an impossible miracle and at best highly unlikely) then the share price will be roughly 30c. ten bagger. Congratulations!
-If SDL have a market cap of $1 Billion then it is realistic to assume EQX management would use some cash (say $5m or maybe $10m of the $40m they already have) to drill Badondo out. Also realistic to assume the market would give a discounted $/t value for the resulting DSO resource. Also upside of a nearby infrastructure solution etc. Lets say EQX could a market cap of $250m with reference to SDL's 1Billion. EQX share price would be $2. ten bagger.
Even this analysis is slanted towards SDL because I think the chance of SDL recovering to a market cap of 1Billion as impossible whereas EQX has multiple solutions to build a $250 market cap (mayoko, badondo, new projects, Belinga build a railway, etc)
Print this out Westcott and read it again in 12 months.
Best of luck.
J9 x
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Hi Westcott and Taboon,
Did you print the quoted post above out and save it for 12 months as requested?
Interesting to assess our different points of view over the past 2 years.
A picture tells the story. Below is a graph of the EQX share price against the SDL share price since the date of my quoted post above. SDL is down 75%. EQX is up 15%. Also from here SDL is looking very sick indeed and EQX is in a very strong position still trading below cash.
Over the years you have repeatedly told me I am wrong and ridiculed my assessments and dismissed my opinions.
I would be interested in your reaction to a review of our exchanges above 12 months down the road.
J9