$50m U.S. is a drop in the ocean. What is interesting here is that the tone of the article suggests that it's a done deal. For those HC posters who got sick of the endless "consolidation" thread, this is a good one to pick up. I hold SDL and though it's tempting to trade it because of the sp movement and the volume, I think it's a better play to hold on for the longer term.
I also hold GXY, and I bring that up only for one reason: It is a company on the verge of sending off its first ore and graduating from explorer to emerging producer to actual producer.
SDL is just following this course. The ore is there. No doubt about that. The only doubt at this stage is about the sheer quantity of the stuff, not about its grade or the cost of production - unlike spodumene for lithium. So the whole game now is about infrastructure and what we are getting in good quantity right now are positives. Hoops have to be jumped though. I's dotted and T's crossed.
As each one happens, I expect a bump in the sp. "Consolidation" will have bugger all to do with it imho. It's all about fundamentals now. Funding, infrastructure, strategic and financial partnerships. The Chinese are in. Labour will be far cheaper in Cameroon than it will be in the Pilbara, so downstream SDL will ironically be in a position to undercut its Aussie competitors.
I don't worry about the reduction in share numbers. It will shake out the day traders to some extent for sure. Two BILLION shares is just too many. You might as well call them pre-WW2 German marks. I expect something like a 1/10th reduction, so 2b might become 200m. The sp would then be adjusted so that if you had 100,000 shares, you will now own 10,000. The .36 share price becomes 3.60. What's the problem?
Chill! ST
SDL Price at posting:
36.5¢ Sentiment: Buy Disclosure: Held
