Hi Favco,"On a serious note, been following you tribe for a lot...

Hi Favco,

"On a serious note, been following you tribe for a lot of years now, your near on family. Like most I took profit when "Bigstar's" numbers came up last time but NOT ENOUGH. At 20c I would still see a good profit, because of topping up in our to regular darker days. But I never acquired my shares then or now for a 20c sell.

I too, think the $1 party wont be this year but I am backing "Bigstar's" figures for the next major profit take
My SDL SP target is between $0.64 and $0.83 for now, and I know there are much more upside for SDL."


It looks like nothing have changed when reading SDL threads ...

Back to 2010 when I did some similar DCF projections for SDL, some people looked at the figures and laughed, I remembered price ranges wise they came up in the air (not only one did come up with any valuation by the way) were between circa 2cts and 8$...

At that time, I valued SDL at $0.67, and the price run from below $0.10 to $0.66 , and I'm very happy if you sold with a very good profit.

The valuation I came up with $0.67 are without SDL entering in production, with low FOB price as being conservative.

This time, we need to take into account the dynamic of FOB prices in my DCF projections and I have always used the base case assumptions provided by SDL (i.e low cost but higher Capex compared to previous figures).

Factoring reasonably with 50% equity and 40% SDL stake, I got following figures:

1) with FOB = US$73/t

Normal case = $0.23

Extension of 3Y DSO = $0.28

2) with FOB = US$100/t

Normal case = $0.64

Extension of 3Y DSO = $0.83


3) with FOB = US$130/t

Normal case = $1.08

Extension of 3Y DSO = $1.41


If we consider case 1, where FOB = US$73/t, I would consider not many iron ore producers could survive considering their high cash cost and lower grade of Iron Ore (comparing to SDL).


So IMO, SDL SP should be valued at between $0.64 and $0.83 using median case 2.


Please DYOR as I could be wrong in my projections.