I am right on the fence with this one (which way it will go), and haven't jumped in yet (that may prove to be a very bad mistake, and I am aware of that) - though I really do want to take a position at some stage if the opportunity presents.
This is without a doubt, one of the best long term stories on the ASX. If the timelines all work and IOre stays strong (likely long term), this could be earning around 2-3billion dollars (that is on 35mt/pa!!) with no debt and Capex paid back. The biggest question is what the heck would management do with the free cashflow?
On that basis alone it is still cheap let alone at 100mtonnes, in which case SDL could be earning more than any of the big four banks - and would even be viable with very low I Ore prices.
Gotta keep in mind that it is still over three years to first production if on time and budget so there is the distinct possibility of another good buying opportunity in the future - in relation to where the project is at the time...
What I men by that by way of a simple example, is that it could go to $2 by the end of 2012 and then drop back to $1.50 for some reason one year out from the beginning of production which would also be another good entry so close to cashflow.
In the short term this could go either way (though short of extremely bad news I can't see it falling that far). It all depends on what other opportunities you can see with other stocks, and I personally I have others that I like more for this year at this stage.
I hope that I can get in cause this is a keeper IMO. I nearly bought months ago but was in other stocks that I liked better at the time and for the most part they have performed equally well so it is neither here nor there when I look at it.
Time will tell which way it pans out, and I hope this isn't another one that got away. Good luck
SDL Price at posting:
62.0¢ Sentiment: Buy Disclosure: Held
