finale : prediction & analysis

Hi SDL’ers, the following is pure speculation, conjecture and just an opinion piece.

It is my belief that we are very close to the finale of the Sundance saga. I’m not ruling out the possibility of a trading halt within the next 2 weeks with announcement of the asset equity outcome. I am expecting volatility.

I am inclined to think that China SOEs will win (or has already won) the asset equity stake (if done at 100% - there is no off take to speak of – they own Mlabam-Nabeba) and by implication the EPC component. Could it initially be a partial asset equity JV…possible but not likely IMO.

In this scenario, it’ no different to the original objective of the Hanlong bid which would transfer the lot to Chinese state steel and infrastructure companies anyway (IMO had the deal not been rendered null & void as China lost exclusivity).

The NDRC statements of a month ago (highlighting supply security and strategic pricing leverage) means to me that acquiring previously-in–the-bag-but-lost Mlabam-Nabeba (a world class asset that China has never owned + 100MTA catalyst) will be a money-is-no-object exercise.

I am also inclined to think the NDRC would be rather pleased that SDL has faithfully reproduced all those key points in a dedicated slide in the corporate presentation to further convey that message.

Could the China Iron Ore conference 2014 be the final piece of the puzzle after the perfectly timed, yet dramatic and very public announcement of Liu Han’s fate (once and for all discarding the Hanlong baggage and legacy).

IMO, no self respecting CEO of a mining company would present to investors that the company has an intrinsic value of $3.50 a share (in production status) when he has no confidence in realizing a respectable number (certainly not 20c) that would correspond to a firmly-on-the-path-towards-production status and influenced by competitive tension (without which there would be no tender in the first place).

A CEO or board can be wide off the mark in the valuation of a company over years. But getting it so wrong potentially just weeks before closure? Don’t buy it at all.

So the question is what gave the SDL senior that level of confidence to put this into a ASX release corporate presentation and for what reason ? As a kind of unofficial disclosure of what the company thinks it is intrinsically worth ? Helping out the Chinese with economical justification of a strong bid ? or Both ?

Taken into account the other slide of a 8-point RE-RATING process and I am forming my own conclusions.

Good luck to all holders !