Despite GJ has obviously ruined his reputation and the current SDL management was/is not able to preserve SH's value, a shame. It is probably fair to say that they genuinely wanted SDL to flourish, if they could. But in a capitalistic world, money speaks, and so they can't have much to say on negotiation table, except keeping their jobs.
The key factor of the SDL saga is, to me, the "ambiguous" intention of China to develop the mines. Using JG's early words, "they are interested". all the time. Remembered someone already mentioned and other reports from China also indicated a few years ago that China had learned bad lessons of failing to develop overseas mines by themselves in foreign countries because of lack of experience and skills. So China does not simply want to take it over. Doing it alone is too risky and not consistent with national investment policy, I suppose. It is quite likely that having an Australian company involved doing the mine development in an foreign country reduces potential risks to China.
However, China does not want SDL goes ahead by its own as SDL might turn out to be a golden goose. The dilemma of "does not own and loose it frustrates Chinese enterprises. They want to control it. My bet is they don’t know how to handle the situation. Believe SDL management understands the game China plays.
There is a risk that Chinese enterprises continue to play the same game to allow SDL management spend all further $7m before financing it, further diluting the SDL value. The question is why they want to do that, given SDL’s market value being already to put to the bottom ? Is a share value 0.1c suits China? I don’t see any need to do that at all.
Does the Chinese enterprises want SDL management do the difficult start-up work and setting things up, and then take it over later in the cheapest price? This is the worst scenario, with a small probability, but the SDL management must make sure on behalf SDL shareholders that wouldn’t happen !
SDL Price at posting:
1.7¢ Sentiment: None Disclosure: Held
