port and rail options

What do others think will be in the best interests of us shareholders??....we have been told that of the 2 final tenderers one wants to own and operate the port and rail and one want to construct it for SDL and be paid back from IO sales.

The more I think about it the more convinced I become that Groupe Bollore will be the European solution and will be the ones wanting to be the owner operators. Not only are they the operators of Cameroon's current rail network but they are also currently involved in the construction/expansion of 15 container terminals on the West African coast and they are doing this with a view to attracting Asian shipping....so are they tailor made for SDL or what. Not only that but when you are dealing in far flung and exotic locations like The Cameroon personal connections are everything. With Group Bollore managing the rail network one would imagine that they are already tightly connected with the government of The Cameroon.

So what will it mean for us if they are owner operator?? How much will it cost per tonne for SDL to move the IO?? $20/t is a figure I am sure I have heard quoted on HC although this may have been a number extracted from the atmosphere. The thing to consider here is that an owner operator means that the risk for SDL immediately drops exponentially. There is 3.6 bill right there that we don't have to worry about. It will be someone else's nightmare. This option may have a much more marked effect on the SP in the short term.....the trade off may be some long term blue sky.

Over the first 10 - 12 years the DSO will be dug up at $21/t...add in the $20/t for haulage and SDL is still in the lowest cost producers in the world.....but when we get to phase 2 and the cost of benefication is added in then we will be over $60 a tonne. This is still pretty cheap but if Murphy's law was to kick in with a bit of inflation in The Cameroon and a bit of a cost blow out on the phase 2 plant and return to an IO price closer to long term norms then profit margins could be substantially reduced...although I would still expect SDL to be well and truly profitable.

The other option would be for China to build the port rail. I don't believe that China gives a tinkers cuss about the port and rail and are only interested in the IO. They would probably be happy to have the money paid back.....and we could do that oh so very easily with our 35 mill tpa @ opex $21. I mean, hell, what could possibly go wrong shhhhhick go wrong shhhhhick go wrong shhhhhick go wrong shhhhhick go wrong.

Maybe we should ask FMG that question. With all that debt they have their situation looked tenuous at best during the recent destocking fiasco. Maybe some hard nosed HC posters wouldn't be worried about our long term prospects but maybe the wider market would be worried enough to have some impact short term on the SP....at least compared to option 1.....but if SDL could weather the storm with option 2 then maybe 5 years from now they could be the next FMG.

What do others think about the possibilities and risks and rewards of these 2 options??