Good post Illiquid. The possibility of the next phaze of the GFC also concerns me, and this is potentially the greatest concern, because it could wipe out any chance of securing funding.
I also share your concerns re dilution, however I don't believe this is the biggest issue, as any dilution will be somewhat compensated by the fact that the share price is currently undervalued based purely on the amount of confirmed resources and there is potentially a lot more to come.
The main concern at the moment, is that of securing strategic partners, and due to the confidentiallity agreement, it is difficult to tell whether SDL are negotiating with potential strategic partners or whether they are still trying to identify possible strategic partners.
If they are still trying to identify possible strategic partners, this would concern me greatly, however I doubt it is the case. With the experience on the SDL Board, I would have imagined that they would have identified all companies that may have been even slightly interested in investing in the project already.
The decision to appoint the Deutsche Bank, after they announced that they were going to recommence drilling, indicates to me that they are close to securing a deal, however the interested party has requested further drilling before committing.
If SDL had no interested parties, why would they appoint the Deutsche Bank. I don't believe they have been appointed for the purposes of identifying potential strategic partners. So they have either been appointed as SDL feel they are close to securing a deal (pending on drilling results) or simply as an act of smoke and mirrors.
As for the number os shares on offer, sometimes I feel that people look too much into the 2.1Billion shares on issue. This 2.1 Billion shares on issue, currently trading at about 15c, is basically the equivilent of having 1 Billion shares at 30c or 500 Million shares at 60c. Try not to get too hung up on the 2.1Billion figure.
SDL Price at posting:
15.0¢ Sentiment: None Disclosure: Held
