Ann: Financing Update, page-65

Lion2009,

Looks to me that the true believers are just glossing over the real gist of this announcement. SDL as you say have now been put on notice and risk losing everything as you say.

Sundance is required to achieve a financing commitment for the mines no later than 9 months (or such later date as agreed) after the Cameroon Government achieves its financing commitment for the infrastructure. If this is not achieved within the timeline or any agreed extension, Cam Iron may, at the request of the Cameroon Government, be required to transfer EP92 to a nominee of the Cameroon Government for no consideration.

Thought I'd copy this section of the announcement over again for people who missed it or have decided to gloss over this important fact. If there was any spirit of partnership remaining between SDL and the Cameroon government they would have allowed for a residual shareholding in the project to remain even if SDL failed to secure funding for the mine. This has been a common practice in other long running mining development projects in Africa.

To me this is signalling very strongly to SDL, that enough is enough, these are important assets for the development of Cameroon, use them or lose them. Wheels have started to fall off IMHO and the sooner people realise this the better. Iron ore prices aren't going to recover. There has been over investment in capacity on both the supply and demand sides of the iron ore equation driven by an unprecedented expansion in credit creation in the world and this isn't going to change anytime soon.

The railway won't be built anytime soon either, so the arguments are rhetorical on both the governments and the SDL's parts. The project has been judged unviable under the current ownership structure for many years now and it won't matter who goes running cap in hand to the Chinese, unless the Chinese get the entirety of the project. SDL has nothing left to offer and all the players now know that. Just a matter of time.

The mining lease was never granted for a reason. That was always the Cameroonian governments out clause. Paul Biya has sat on SDL's mining lease application for years. Now he is almost ready to throw it in the bin and hand the rights to any party that can prove that it can go the distance. This agreement gives him a legal mechanism by which to revoke SDL's interests without sparking legal recourse through international courts of arbitration which may have happened if he just decided to revoke SDL's rights without warning.

You've just got to look at how other long running leaders have been thrown out of government all through West Africa (recent point in case is Burkina Faso). These decisions are more important to African leaders than most think. They can become existential necessities when political conditions in a country start to change. The people have had their expectations raised by the prospects of the development of this iron ore project. When expectations are raised but are not subsequently met, the political gaze and blame falls on the government, just like everywhere else on earth. The political reality means that SDL will have to perform.

Eshmun

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