quarterly actrivities report ..., page-6

The first thing that came to my notice was the thrifty use of money for the quarter, being $5.6 million. This is a very good outcome as cash is king at the moment, and if SDL has money in the bank it will be able to negotiate Mbalam on a much better footing.

I also thought it was very encouraging to hear that SDL has received proposals from a number of investment banks regarding project financing with the selected partner. My biggest concern has been to do with the large CAPEX. If SDL is receiving proposals from investment banks then these banks are obviously interested in the project, and the credit outlook may not be as frosty as I suspected. By possibly achieving financing from investment banks for the project it may also mean that SDL doesn't have to relinquish as much equity in it's subsidiaries (or indeed itself) to attract possible partners. This could be a huge plus for holders of SDL.

The upgrade of the Port plans to accommodate larger ships is a big plus as well. If shipping costs become comparable with Brazil and Australia you are removing one possible factor that could have deterred investors.

I don't know what to make of the purchase of the new diamond drill rig though, it can be looked at from two perspectives. One perspective is that SDL is yet to convince anyone to partner them, and they need to sure up more high grade haematite to get any deal over the line. The other perspective is that the SDL directors are confident in securing a deal, and that conserving cash is not as high on their agenda as it had been at the start of the June period.

The last thing I wanted to mention was the timelines the company has put in place for various things. Keep in the back of your mind what is happening on August 31. The Project Feasibility Study and Draft Environmental and Social Assessment are targeted for September 2009. We could have an interesting month or two ahead either way.

Good luck.