Hi Parrothead, I dont agree that the boat has sailed on SFR.
If as you suggest, $1.5bn is too much to pay for an asset like SFR then the only alternative is Greenfield development: staking claims in the ground and drilling lots of holes (which they are effectively doing at PH!). High risk but high reward!
You ask why didn't OZL take out SFR when they had the opportunity. The point is that they didn't have the opportunity. I'm sure they tried, but as soon as the potential of De Grussa was identified, they couldn't find an entry point. Their first step would have been to knock on the doors of the Koreans. Posco and LS Nikko hold 17% and 12.5% respectively. They understand De Grussa's potential and are interested in offtake. They weren't after a quick buck and would have shown OZL the door.
That's not to say that they wont be interested in the future. There is still plenty of value to be added to SFR. $1.5bn could still be considered a good price for a proven resource. I suspect that the Koreans will have greater faith in OZL's ability to deliver the De Grussa project than SFR. We might at some stage see a share swap (OZL shares for SFR shares) which will bring OZL's stake up to a controlling interest.
As for the departure of a few senior managers. The "exact skills" of these guys are not necessarily transferrable to the next project. Processing technologies vary from project to project. Finding middle managers and a contruction/operation workforce will be a bigger issue for OZL than finding suitable senior project directors.
As for the prospectivity of PH, you seem to be the only one questioning that. Geologists who understand these things much better than I ever will obviously think that the region is worth spending tens of millions exploring.
They've decided that exploring in the PH region offers greater prospectivity than targeting a company in another region whose exploration prospects might, but most likely wont, make it the next SFR!
OZL Price at posting:
$16.55 Sentiment: Hold Disclosure: Held
