Last breaths, page-17

Hi jayneen,

I agree with a lot of that to a point.

The Mbalam/Nabeba project is currently not commercial.

The only evidence needed to prove this is that no investors were willing to commit capital to fund the transport infrastructure when the ADB was recently looking for interest.

The result? The Cameroon Government had to step in, take responsibility, and is dealing directly with Chinese SOE's & the Chinese Government.

IMO whether operations right now would be slightly profitable or loss making isn't the relevant point, the relevant point is that the project would not currently be funded if it were left to commercial devices.

That leads us into the big question. Are the Chinese prepared to invest in a marginal, or possibly loss making, project to secure part of their supply and open up the African IO market.

lbd makes some interesting points about tariffs being flexible to ensure the project could stay afloat. Presumably, there could also be some understanding between the Chinese and Cameroon Governments re the Sovereign loan to accommodate project difficulties.

With the Governments of Cameroon and China now directly involved, commercial profitability may not be the deciding factor. This is the key that SDL is really now relying on.

Secondly, if the Chinese are happy to invest, will they want to take SDL shareholders along for the ride knowing full well the project goes nowhere without Chinese capital?

I agree that the logical market is China. Noble have rights to 50% of production and only sell IO into China. If the Chinese are looking to fund transport and mine infrastructure, I can't see production going to Europe or the Middle East. It doesn't make sense.

Cheers!