Last breaths, page-12

Interesting point you raise about operating costs and the current market conditions. A question along these lines was asked to GC at the AGM as I'm sure the same concern as yo raise was held by the questioner. GC was at pains to highlight to people that the quoted costs to the market of $45/t include shipping as well as the cost of servicing the finance requirements for the project, unlike companies such as FMG which exclude these cost and have to service their debt from free cash flow. He also noted that the tarrif rates that were agreed to with the local governments can be adjusted during the course of the projects life to ensure that the project stays viable. there is room for SDL to alter the quoted costs to ensure the project stays financially viable.

One needs to read the quoted OPEX costs with caution to see what is included in these costs and what is excluded. I've made this mistake interpreting the numbers myself.

The time clock on financing requirements from SDL perspective start ticking once the term sheets for the sovereign loans has been agreed too which they expect will occur 6 months after the EPCM contract has been announced. They will though start their negotiations for finance once the EPCM contract is in place because without this the financiers are not going to take them seriously. Some of us will still be skeptics and won't believe anything until we see it being built based on past experiences but it felt like everyone associated with SDL believed the after affects of Hanglong caused a massive 2 year hangover the company had to overcome because the partying at that time was the right thing to do based on the information that was available at that time.