Iron Ore Price, page-13804

Rc,

Past history of loan repayments

15-10-15 $384.0m
25-11-15 $750.0m
27-04-16 $ 577.0m
04-05-16 $650.0m
23-06-16 $500.0m

Note the payments made in succession, April, May & June 2016 ($1.727b)

Average realised price was $45.0mt in 2016

So far this year only $700.0m repaid

Current outstanding

2019 Notes $2.976b (3.75%)
2022 Notes $478.0m (around 6.875%) Payable from April 2017
2022 Notes $2.16b (9.75%)Payable from March 2018
Finance leases $500.0m

Total gross debt $6.114b, 33.00% net gearing 30-09-2016, and net debt $4.2b

They want to maintain minimum $1.0b as base liquidity (cash) see Media Presentation Sept Quarterly Report

Based on you average IO price to Nov 2016 ($58.0mt) allowing a discount of 15.00%, realised price is around $50.0mt extra $5.0mt from 2016.

I believe that they will repay the debt as follows:

Dec 2016 - 2019 notes $1.0b (3.75%)
Feb 2017 - 2019 Notes $500.0m
April 2017 - 2022 notes $478.0m (6.875%)

Gross debt will reduce at end of April from $6.114b to $4.136b, this should be the most pessimistic scenario even if IO price only averages $60.0mt. Net debt should be around $3.0b (based on cash on hand of $1.0b) or less

Cash flow scenarios based on IO 62.0% fe price and allowing discount of 15.00% and allowing for all up costs of say $30.0mt to be on the safe side with 170.0mt annual production

$60.0mt realised $51.0mt profit $21.0mt * 14.17 = $297.0m mth
$65.0mt realised $55.0mt profit $25.0mt * 14.17 = $354.0m mth
$70.0mt realised $60.0mt profit $30.0mt * 14.17 = $425.0m mth
$75.0mt realised $64.0mt profit $34.0mt * 14.17 = $482.0m month
$80.0mt realised $68.0mt profit $38.0mt * 14.17 = $538.0m month

So far for Dec average IO price 62.0% fe has been between $70-80mt

The numbers are huge at an IO average price above $70.0mt.

You are right, huge debt repayments coming soon, especially if IO price stabilises at above $70.0mt

Anyone care to dispute the scenario?