Most days Mr Market is irrational and his valuations do not reflect reality. (Either too hi/low)
Another method of investment valuation is calculating the future cash flows;
Correct my back of the envelope calcs if they are wrong.
Sundance’s 775Mt of rare DSO x 58% = 450Mt of pure iron ore: Street value @ $100per ton = $45 billion. Take away production costs of $50 per ton = $ 22.5 billion profit or about $ 8 per share. Please ignore the other 4 billion tonnes of lower grade reserves, as they only add to Mr Markets confusion, because he only values it @ $0 per ton.
9c per share might represent good buying value, considering a future potential profit of about $8 per share? But I could be wrong, because there is one thing wrong with trying to predict the future and that is the future itself.
Predicting when and if some value might be realised for shareholders is anybody’s guess. But if “Most reserves of DSO have now been depleted” as stated above in Wiki, then that ore, to the benefit of shareholders will find its way to a blast furnace sooner rather than later.
Kind regards,
Tongal
SDL Price at posting:
9.2¢ Sentiment: Buy Disclosure: Held
