SDL has just released a progress statement, to clear up references made about its CAPEX in AFR.
Summary goes as follows:
On track to complete DFS by the end of march.
Expanding the scope of the project to include a second mine, 60km spur line and processing facility to mine simultaneously with the high grade hemetite resource.
Costs expected to be 20% more than the PFS CAPEX that was done in 2008 because of the above plan.
SDL confirms talks with financing and strategic partners are proceeding well, and has also for the first time i believe mentioned that its considering a debt/equity split of 70/30.
What that means: (IMO)
Unlikely for financial partner to take 50% of project as per a post i read earlier today.
30% Equity (depending on share price) will amount to about $1.2 billion (on a CAPEX estimate of $4b). At todays share price that would include new shares of 2.4 billion taking the total shares on offer to about 5 billion.
SDL also said still targeting 35mtpa, (CAPEX and OPEX will be confirmed in the DFS). At $100 price of iron ore (i have seen long term estimates in alot of other iron ore companies using $120p/t) it will generate $3.5 billion before costs, interest and tax.
On a per share basis expected revenue per share to be about 70cents. Include production costs, interest and tax; Assume $1billion is left as a NPAT that gives a 20cent EPS.
Realistically; Equity raising wont be done today at 50cents. Will be announced soon after the financing agreement and strategic partner agreements are announced; at 80-100cent share price. I expect it wont be raised on that announcement either, it will be raised a little while after, once project development gets underway at a share price hopefully north of $1 (seems reasonable)
This would then only need new shares of 1.2 billion (as opposed to 2.4 billion at 50c). Total shares would be closer to 3.6-4 billion.
There are still alot of factors to be considered, but everything still looks on track.
Remember before Equity financing for this project, we are going to get confirmation of:
1. Resource upgrade --> extension of mine life 2. DFS figures to support how huge this project is 3. Strategic partner ---> offtake agreements 4. Financing partner ---> terms and conditions
And remember with this project, we are set to OWN a couple billion dollars worth of infrastructure as an ASSET that will generate income from other parties.
SDL Price at posting:
51.0¢ Sentiment: LT Buy Disclosure: Held
