Ann: Decision to Mine for Mt Webber Iron Ore Proj, page-12

re: Ann: AJM: Decision to Mine for Mt Webber ... Why is it a profitable move? They are paying $146m for extra 3Mt capacity, so before the mine is up and running they are already down $146m.

Now to recoup that $146m + interest in 10 years, they will have to make at least $7/t profit for the 3Mt per year to make the money back (repaying $20M per year, total debt + interest = 200M after 10 years), and that is JUST to get the money back.

Now if we want to generate a 5% return on top (that's what I can do if they pay that money out as dividend and I put it in a bank instead) then will have to make extra $5/t profit, so total will have to make per tonne profit $10/t to make it generate a poor 5% return over 10 years.

Even right now AGO is probably barely making $10/t profit on existing mine, good luck trying to run a costlier mine(cash cost of $56/t vs $50/t now) in a widely tipped lower iron ore price environment and try to make $10/t profit out of it.