if you want to include payables into debt,which is fair enough,many companies cook end of year books to make them look good.Then DO include receivables as assets to give a balanced view.
I Do and that is why ARI's First half figures,were far far better than the company portrayed them to be with around a $400m drop from memory in total debt at the time.
You could also include accumulated tax losses,if you want to go overboard.Their value limited if you see the majority of profits made outside of Australia for a few years.
I can happily live with ARI making just $300m a year($100m first half and $200m second)and shedding $600m cash,$60m of which shareholders see in divvies,$300m back in the business and $240 off debt going forward for a year or so.Coincidentally,their debt due over the next year is around $160m.
That can so easily change positive should scrap or steel values change.
They are receiving the full value in the drop in the coal price along with better grade ore from their beneficiation plant upgrade.Less silica means more iron for the same feed and coal and plant.
The resizing at Waratah,may add more to the bottom line than just $15m in wages.
Just as expansion in South America,may save logistic supply costs,all very important when your talking about shipping tens of thousands of tons of media to mine sites from outside the country manufacturing facilities.
Its like COKE putting in another bottling line.No doubt they run all the others 100% of the time before they do,so only ever have one running less than optimal.The larger and more geographically diverse the supply options the greater hold they have on the market.
Just as I wonder how long Gerdau,who I believe also make balls and was believed to be losing money on around 50MTPA of 58%FE ore exports from Brasil when ore at $90u/s in one article,will be in either market.
Marginal Miners without long term supply contracts to MILLS,without infrastructure and grade are falling like fleas after a house flea bomb.Contracts with trading houses,worth very little in a flushed market.e.g.WDR
ARI's customers for 70% production contracted LONG TERM to mills with value in use -DUE TO CONSISTENCY and low contaminants.
The other 30% or 3.8MTPA,ARI could choose not to sell,if they jump the supply grade and stop mixing in LG ore.
DYOR+DYODD Cash is king-----even in a neutral business environment how much of the $650mish cash is still in the coffers and how much are ALL businesses individually throwing back?All up stay in business D&A investment 50% steel
75%mining consumables(after paying debt on $1bn +cap inv) lets call mining even(given the large Capital investment at IKMBR). ARI spend cash inflows 6-12mo after they receive them and appear to announce additional capital expenditure during the year only if actual cash flows are well above their forecast cash flows.
Latest Google map pictures of the site I found rather an eye opener,the material in the waste heaps had better colour than the proposed ore to be mined in the pit.Just an illusion?
What wasn't was the train length at 52 wagons heading along the MBR line,showing a little bit of supply train sweating.
ARI Price at posting:
69.0¢ Sentiment: Buy Disclosure: Held
