"Territory is making an operating profit on the tonnes they are digging and shipping. That is different than making an actual profit. If they were making an actual profit they would not be negotiating with lenders nor would they have had to "work their way through""
BlytheFan the hedging debacle is over in 4 mths. So there has been and will continue to be debt built up for another 4 mths. No big deal IMO considering like you said they are making a operating profit, which means in 4 mths TTY will be cash flow positive.
TTY have entered into Memorandum of Agreements with 3 Chinese steel makers that will secure sales for the next 3 years. The price of the ore will be benchmarked against the agreed annual contract prices between BHP/RIO and the major Chinese steel makers. RIO have already said they won't accept a contract price below current spot prices. If this happens, TTY will make a even bigger profit because they are selling on the spot market.
TTY have said the hedging debt will take 2 years to pay off. It doesn't necessarily mean TTY couldn't pay it off in 6 mths depending on budgeting allocations etc. We'll also have more clarity on this when the final debt amount is announced and what price TTY will get for their iron.
Although significant, I think this hedging debt is getting blown out of proportion.
TTY Price at posting:
20.5¢ Sentiment: Buy Disclosure: Held
