please read clsa july last year

Hi All.

Shoot me down if you like,I will always think it is a very bad deal for SDL long term share holders if this deal goes through.
Sundance need Hanlong and Hanlong need Sundance.Sundance to get Convention and Mining Permits,Hanlong need Sundance to be in a better financial position.

When quality counts 18th July 2011 by CLSA Asia-Pacific-Markets.A$0.49 - Outperform.Only in part of the Report.

We believe its low operating costs and high-quality iron ore will result in industry-leading margins.We view Hanlong's conditional bid as a catalyst to draw out corporate action and see further upside in the short term.

We view the superior quality of Sundance's Mbalam development as sufficient to attract plenty of bidders in a probable sell down of the project to a joint-venture partner or outright bid for the company.A bidder with a more bullish outlook for iron ore and lower cost of capital could pay a premium to our base-case valuation.Given Hanlong's proposed offer is below our base-case valuation,we believe it is opportunistic and will be a catalyst to draw out further interest in the company.

The project's high-quality direct-shipping ore (DSO),a low strip ratio as well as cheap labour costs put it firmly at the bottom of the global iron ore cost curve at US$21.20.tonne FOB Cameroon before royalties.

The project's maiden reserves announced in April 2011 demonstrate the quality of the ore,with a Fe grade greater than those of existing Pilbara mines.This should lead to a premium price and compensate for the extra shipping distance from Cameroon to the dominant market of China.

Industry-leading margins.
Low cost and premium product lead us to believe that Sundance Resources'Mbalam project should achieve margins superior to those of its Pilbara-based competitors.

Worth noting,our NPV and target price is based on US$60.tonne CFR China long term iron ore prices.However,at US$70/tonne our valuation and target price increases to A$0.97.

Long-term margins analysis of Mbalam project verses Pibara-based producers.
Net revenue per tonne SDL $61.52 - RIO-BHP $60.00,FMG $56.88.
FOB cost.SDL $24.00 - RIO-BHP $26.00,FMG $28.00
Royalty-long term.SDL $1.85 - RIO-BHP $4.50,FMG $4.27.
Freight SDL $13.00 - RIO-BHP-FMG $10.00.

Net landed costs - Qingdao SDL $38.85 RIO-BHP $40.50,FMG $42.27.
Margins - US$/t SDL $22.67 RIO-BHP $19.50,FMG $14.62.
Margin % - SDL 37% - RIO-BHP 33%,FMG 26%.

The Company expects the royalties in Cameroon and The Congo to be between 2.5-3% while royalty rates in Western Australia are increasing to 7.5% by 1 July 2013.Hence margins at the Mbalam project which were already superior pre-royalties,only improve after royalties are accounted for.

Importantly,higher-grade iron ore often receives a small premium over and above the increased iron ore units.We estimate a premium of only a few percent for Stage 1 hematite production with a grade of 63.6% Fe but a premium of about 10% for stage 2 production which has a grade of 66% Fe.

I know some don't like to read this type of posting,but I feel it is just one more justification to believe Sundance Resources is being sold off at a VERY LOW PRICE.

Sorry if I have bored anyone.

Regards
Westcott.