possible clue to asset sale price , page-29

Hi Bobby, the EPC decision following the offtake/asset equity sale decision is only logical unless one entertains the scenario of the euro-commerical consortium taking on debt to build the EPC to carry Chinese ore (which itself is quite silly as the NDRC has clearly stated it wants to build, own and control the infrastructure - no less so than Sinosteel wanted to build Oakajee but was rejected) or the madness of China giving up on the asset (the NDRC wants to BUY to have a SAY) and just haul ore for the Glencores of this world.

But....

The offtake commercial contracts discussions is a RED HERRING (IMO). The real deal is the asset equity sale. Whoever owns the resource determines who gets the offtake. We also know the offtake securely FUNDS the EPC (to be awarded exclusively to either China or Euro camp). If SDL says offtake discussions are advanced, it means (to me) a 100% asset sale (a change-of-control event) is not far off.

So, no matter how you chop and dice it, it's a case of winner-takes-all. China or western. Nothing in between.

(IMO) there is no such thing as a partial asset sale. There is no way China will acquire say just 50% of mlabam-nabeba to build the EPC (when the NDRC stated ownership = security supply and 'spaeking rights") and not knowing where the other 50% will go at some later time. It also contradicts China national objective of owning at least 50% of all imported ore (thus far some sources suggest it is in single digit %). Why acquire half to suffer the uncertainty and dilemma of partial ownership (liek China's 45% stage in Simandou). There is no advantage whatsoever. (IMO) a partial asset sale is a very effective bargaining tactic on the part of Sundance to extract the maximum outcome.

It is just as absurd an idea for a commercial consortium to build a multi-$$ billion EPC (it has to be awarded EXCLUSIVELY) using debt or cash when it doesn't own the asset. Would FMG, RIO or BHP be building massive infrastructure on someone's eles's tenaments ?

Hence, my case of an eventual takeover (now that the participants have followed the rules and submitted the EPC tender) is simply a 100% asset acquisition.

Why SDL put a $11B and $3.5+ per share in the presentation as a production status EV ? Dunno. But it would have been done for a good reason.