At a SP of 22c the MC is around $100m.
If you go back to the FS, based on an IO price of just $US78/t the NPV was $54m. Yes costs are a bit higher but EV has still got to be around that mark for IO prices at or about $90/t. Let’s say EV of $60m.
if you assume they still have over $40m in cash and the benefits of the hedge, it’s hard to see it dropping much lower. The real challenge everyone is facing is the prospect of a slide in IO price to say $US70/t. FEX will survive the next 12 months but the healthy 5c dividend may be achieved for a year or so but where to then.
The market is very uncertain at the moment. Stagflation, bubbles, cryptocurrency and lots of other risks out there so I expect a lot of people will be moving to safer territory. My SMSF adviser is really nervous that his clients are holding far more safer assets; low risk/low growth . I think there are lots like him who will be taking a bit of a loss to ensure their portfolios don’t drop too far if something happens. IMO FEX is still a good hold but it’s value will start to diminish if IO prices stay below the $100 mark for too long. I’m thinking I’ll be waiting till March 22 before making any big decisions on adjusting my holding.
Get COVID and Winter Olympics out of the way. China will have settled and the growth pressure will be upon them. Could be a different world; better or worse - who knows.
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