Atlas Iron (AGO) is the remaining stock with impressive numbers, page-4

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gonegassed

13,783 Posts.

19/06/14

09:43

Post #: 13543713
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Originally posted by GreenTint ↑

Hello gassin123,

re AGO P/B = 0.39

That might be 'misleading' as an indication of the value of the business.

The BIG number that I see is a non current asset, 'Mining tenements capitalised' = $757m

Or 'Mining tenements capitalised' = 82 cents a share.

If atlas is trading correctly today in terms of sector p/b @ 0.66, it's assets need a write down of 0.73 per share. Or the rest of the sector is priced incorrectly.

So Book = 167 - 73 = 94

Gives a price/book = 0.66

A 90% write down of 'Mining tenements capitalised'? The accounting value of Mining tenements is not my area. My understanding is that because price is below book all year then there is a automatic audit and corresponding revaluation of assets. Are they valued at consensus Iron ore forecasts?

All this is of no concern for a buyer today all IT"S ALL IN THE PRICE now. It is of course sadly for a buyer north of $1.50. Though It's just a accounting valuation of no consequence to future cash flows, which is the only thing that matters going forward. Especially since there are not any debt covenants on Facility B $US275. A buyer at $1.50 + ages ago might end up getting cash flow to match or exceed their price paid in any case. The Iron ore price might rise and average much higher than $93 of the 4 weeks and/or the currency might fall.

On the currency, there are more and more media reports commenting the commodity representing 25% of Australia's export income has fallen sharply but the currency hasn't moved. Both can't be correct for very long and won't be!

What time frame is the big question of course (as always)...

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its all up to the AUD to save the OZi IO industry now ... if AUD can base at 80c by year end ... IO producers will be Happy..er

AGO Price at posting: 62.5¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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