Ann: Change in substantial holding, page-10

It's incredible we get non-stop doom and gloom reporting every time the iron ore price ticks down, but when the AUD ticks down there is complete silence. It just doesn't fit with the doomsday, serves-you-right narrative directly at iron ore equity holders, even though an AUD falling through 80c and an iron price holding or rising through $70USD/tn suggests the possibility of $90-$100/tn AUD for IO.

ARI was EBITDA positive with steel through FY2014 while dumping was ramping up significantly and the AUD averaged over 90c. Now we have the AUD down 10c, regulatory action on dumping around the corner, an extra $50m taken out the of cost base (flowing through to second half of this year), and a view by the company of a visible uptick in demand for steel for the first time in 5 to 6 years. And yet we get trolls coming out of the woodwork telling us that substantial holders buying this stock with their ears pinned back based on this reality is just a mirage.

The falling AUD continues to underwrite the book value of $2.45 billion for mining consumables and the market value of ~$2 billion. ARI will not raise additional equity. If steel does not recover over the next 6 months then 50%-100% of the mining consumables business will be sold by June. A debt free ARI will hold cash in the bank and continue to operate iron ore and steel divisions that will deliver more than the $0 of value the market currently ascribes to them - largely off the back of an AUD that will almost certainly be sub 80c. If steel performs sooner then the business will be held together.

Both of these scenarios is what underpins Allan Grey's investment case and how they will make a return on their $106.4 million invested at 29.8c.

And how current and new holders will make the easiest 100% capital gain ever over the next 3 to 6 months.