risk & hope

I simply can't accept the assertions in the Financial Newspapers this morning that it is sensible for Hanlong to seek to buy at what the market says is the price (or at 25% premium to it). That is a facile and superficial assessment of what drives the SDL price.

For some time the low SDL share price has been set by day-trading of less than 1% of the available scrip. It is only 1% of the available scrip because all of the rest of us (and Blind Freddy for that matter) can see what the true value is and wouldn't be so foolish as to be caught not holding when an announcement could be made at any time.

So the whole of the market cap is based on trading of less than 1%. Ergo 99% of shareholders say it is ludicrously low! I hope they vote that way. Isn't it painfully obvious to anyone??? Is 1% ever representative of anything???

As I have previously said on this forum, I am concerned that the Chinese have invited the Cameroon President Biko for a "State Visit" on the same day this offer is made and also that the Chinese engage in Sovereign risk mitigation, which might include offering "aid packages" to get what they want. How many small African state leaders get that sort of treatment in China? A couple of hundred million in aid whilst maintaining or improving the royalty regime to stall the approval process and force a drop in the risk adjusted price and thus pick up a multi billion value asset??? A tempting thing for a President with an election (however rigged) coming up. MMM - I wonder.

Equally I am concerned that at this time there seem to only be Chinese buyers, who traditionally don't bid against each other (albeit that Hanlong is not Government owned).

As one who has held for a four years now, eagerly awaiting a deal, I fear that the only way we the shareholders will get even half of our real value is if...
1. the board actively seeks a non-Chinese buyer (a POSCO / Accelor Mittal maybe) to maintain competitive tension (assuming the state visit I mentioned above doesn't result in only one possible outcome) or;
2. If RIO etc wake up to the rail/port capacity issues it may face if it doesn't get in quickly or;
3. If RIO and others realise the adverse effect that 100% Chinese ownership of massive West African assets at very low production costs will have on their Australian IO price negotiations. There is a very very big gap between African cost of production and Australian desired sell prices.

I hope I'm wrong but I'm very nervous - Hanlong only need 50% to have effective control and strip the whole asset to another of their companies for a song - they already have 18%. In that circumstance Market cap is a powerful arguement for our toothless corporate regulators to accept to support a sale price, if Directors acceptance of it were ever brought into question.

Once again I hope I'm wrong.