Not too sure if AGO is a bargain. In last half year all in production cost was $85 (mine cost + port + shipment + royalty + corporate expenditure). AGO needs 62% benchmark iron ore at $110 just to break even, right now they are making ~$20/t profit, at 8mt/yr that's still only a paltry $160m, if Vale is correct about $110 long term they won't make any profit at all
IMO AGO just spent way too much trying to expand without ever showing any return for shareholders. Even at this time they are still talking about spending $bns to build a new rail, which seems crazy, where is the money coming from? AGO needs to focus on cost savings and generating cash for shareholders, not empire building, before they do that share price is unlikely to rise.
AGO Price at posting:
85.0¢ Sentiment: Hold Disclosure: Held
