I tend to rule out the “market shocker deal” that the Vale chief mentioned has anything to do with the Pilbara.
Never mind Rio and Vale are dragging their feet on Simandou (Rio’s project has a gargantuan $25B capex price tag) even BHP doubted its viability (see link).
Vale’s BSGR project is in the middle of a FBI probe and could fall apart as per media speculation.
Let’s cut to the chase. Among all the crappy projects in Africa, Sundance is the only DSO play (at a huge one at that).
At cash cost of $21/t, it would make RIO blush. The Sino steel Cliev Palmer special and Gindalbies of this world have close to $100/T cost.
Now I know why Westcott kept reminding us of the ibatirite (4.5 Billion tone +). It has a cash cost of $41/T.
Holy Moly ! That’s about the same cost as FMG haematite DSO (prior to Kings / Firetail being commissioned).
Sundance ibatirite is CHEAPER than AGO’s DSO haemetite to produce. Sundance mine life is MINIMUM 30 years.
Now comes the shocker.
When the Chinese had Sundance in a China-Only head lock (prior to the definition of a 50% increase in DSO resource and a significant increase in itabirtite resource), they offered a low ball 57c a share (no competitive tension)
The added value translates roughly to 85.5 cents per share.
Now even at a $1 per share, that’s only a 17% premium to the China-Only low ball bid (factoring significant increase in defined asset).
A $1 per share is NOT a market shocker. It’s a small premium to a deal where competition at the time (COULD NOT surface).
China just paid $1 BILLION for 16.5 % of Tonkelili (a magnetite resource).
You guys can do the sum.
SDL Price at posting:
7.2¢ Sentiment: Buy Disclosure: Held
