Whenever a Iron Ore price is quoted in USD it MUST ALSO have a AUDUSD price.
Here is copy of a previous post of mine using $US80 Iron Ore. Which is Goldman's forcast for FY15.
Looking forward 12 months, using Goldman's (i.e. the most bearish!) forecast.
Question : Where will AGO be in terms of net cash at end of FY15?
Answer : FY15 @30/6/15 AGO's Net Cash = $31m
Assumes FY14 @30/6/14 Net Cash = $29m, based on NO change in Iron Ore and currency from today until 30th June. Cash Capex = $100 this quarter as indicated in the 24th Apr 14 conference call during Q&A.
ANALYSIS
Note : Accounting (Statutory) Profit is influenced by DA which is not the same as Cash Capex. Guidance for FY15 Capex = $122m but FY15 DA is guided at $156m to $180m. ($13-$15 / t * 12Mt)
Goldman Sachs forecast of Iron Ore and (AUDUSD) for FY15 ...
** All in cash casts is at the low end but so is the grade assumption above.
Cash Profit per tonne = $18.40
Tonnes = 12Mt * 18.40 = $220
FY15 Guided Capex = ($122)
Cash Flow = $98m - Interest (22) = $76m
Assuming end FY14 Cash = $323m and Dividend (0.03) paid (Oct 14) = ($28)
As at June 2015 AGO will have cash = 76 + 323 - 28 = $371m
Debt revalue $US272 * 1/0.80 = $AUD 340m
FY15 (@30/6/15) Net Cash = $31m
Market Cap @ 0.72 = $658 - Cash $31m = EV
Enterprise Value @0.72 = $627m
UNUSED DRAWN DOWN DEBT...
IF AGO REDUCED their unused drawn down debt to 0% they generate approx $70m MORE in cash in FY15 ! Interest saving $20m + $50m in revalue saving due to currency at 0.80 on 30th June 2015.
That would imply management is delaying further expansion and intending to fund it with cash flow and not debt. I am sure AGO are discussing that. It is after all how the company expanded until 2012. Above comments are based on Goldman's forecast actually becoming reality. As $70m is 7.6 cents a share or about 10% of the current share price, it's something to keep in mind.
AGO Price at posting:
73.5¢ Sentiment: Hold Disclosure: Held
