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I've just re-read the investor presentation from March this year and management's bemusement at the under-valuation of SBL was palpable THEN. Now the share price has halved, courtesy of a $5m capital raising at what WAS a heavy discount to the SP then prevailing of 3.4 cents. It currently sits at 1.7 cents -precisely half - despite the fact that first gold production is slated for Q4 2010 or Q1 2011. In my opinion, here is why should investors take another look at the company:


1) its in-ground / oz value is a fraction of even its lowest-rated peers in West Africa. Many are trading at above $60 / oz while SBL is now around $12 / oz.


2) the re-commissioning of the treatment plant that should deliver first pour is well under way and the Konongo tailings should provide profitable mill-feed for years to come at very low cost. These tailings which became uneconomic at a gold price of $300 / oz are now hugely profitable with gold holding around $1,200.


3) the upside for those who add to their investment or buy in now is that the company has effectively staged a 50% mark-down sale despite adding $5m cash to carry it through to first production. That is galling to those like me who bought in before the raising but I have worn it because getting into production the quickest way possible suits me just fine. Even first stage production of 20 - 25,000 oz per annum should see the SP revalued in multiples.


4) ongoing exploration on the world-famous Ashanti gold-belt is likely to add significantly to SBL's current 1.2m oz JORC-approved. While the grade of the tailings is naturally low, extensive drilling over the 12km site has delivered very exciting green-field grades which should sweeten the bottom line considerably as production gears up to a planned 100,000 oz per annum.


All in all, if gold prices hold above $1,000 (and there is every sign they could go towards $1,400 in my view) and SBL gets into production within the next 6 - 8 months as planned, I am looking for a SP closer to 10 cents than the current 1.7 cents. The market simply will not allow a company with significant production to languish at a market cap of just $20m.


Consider that when production of 100,000 oz is reached, on very conservative estimates the company should deliver profits of $70m per year assuming a gold price of $1,100 and deducting 50% for costs (from what I have read, SBL's production costs are actually likely to be in the lower quartile of sub $400 / oz). With a conservative P/E ratio of 8 factored in, anyone care to calculate where the SP might be? It begins to get exciting, doesn't it.


You can only wind a spring up to a certain point before the coiled energy is released. A decimated SP has certainly wound me up! Now it's time to break out.


DYOR as I have a strong vested interest in the outcomes mooted above.



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It surely is interesting.


The company has made shareholders well aware of the recent capital raising and not too mention they do have cash in hand so logically cash flow would not jump out at you as an issue. I interpreted the move as cash raising to either increase volumes and/or speed of the upcoming production phase of the operation.


Drilling results are great, future prospects look quite appealing... is it too good to be true? (based on other African miners it should not be the case)


IMO SBL under 3c per share is good buying.


Obviously time will tell come Friday when they make the announcement.

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Based on the company announcement on 10/3/2011 (see below link for full announcement) Patersons have underwritten the rights issue... "pursuant to lodgement of a prospectus to ASIC."


I wonder if that should actually state "subject to the prospectus being lodged" and if that was the case, does that mean Patersons gets first dibs on the latest company information before they sign on the dotted line?


My personal opinion remains unchanged (although I am getting a little nervous) and that is i think the company looks promising... speculative but definitely promising.


Am I having a shocker and missing the mark completely???




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Since it appears a fully underwritten issue the underwriters would have the right to pull out if any of the specified conditions in the underwriting agreement were breached, its odd SBL have moved from a trading halt into a suspension, not clear on the significance of the status change,---if any---- just have to wait and see.


CF: Underwriters in effect commit their own money/assets---so you can bet your sweet life they go through the company like a dose of salts.

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