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AGO

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4.5¢ atlas iron limited

fair value for AGO, page-11

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Richie2013

4,028 Posts.

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28/02/17

08:31

Post #: 22956440
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Originally posted by Samboy69 ↑

So according to my predictions last week & the actuals I was almost spot on & slightly conservative:-
Rev: up from A$372mil to 498mil, my call $490M (1% difference)
Margin: up from 30m to 102mil, my call $64M (40% higher)
EBITDA: up from 20.5 to 66.2mil, my call $42M (50% higher)
EBIT: up from -26.8m to 25.38, my call $22M (10% diff)
statutory PAT: up from -114 to 18.91 mil, my call +$22M (5% diff)
Cashflow: up from 14.1 to A$94.4 mil, my call +$100Mpa (5% diff)
Shipment: 8.1 MT correct (0% diff)
Av PIO: A$61/t, actual $66 even better (9% diff)
Full Costs/AISC: A$51.75/t, actual 52.30, close to spot on (2% diff)
Debt payments, +$22M extra, none extra, surprising
Profit after Tax 22M (after impairments & writedowns), actual $18.9M, similar (10% diff)

On current IO price, this means a running margin now -
94/0.77 = 122 x0.57=$70 - $52.30 = $17.70 per WMT x 16Mpa=
$283Mpa free cashflow or $24M per month

With annual sales of AUS$996M pa, free cashflow of $283M pa, strong margin of (17.7/52.3) = 34%, lowering costs and surplus cash
One has to compare it to MINRES which has double the sales income, quadruple the cash and no debt with a $2.1B MCap. On this basis AGO ought to be valued at a MCap of $1B triple the current AGO Mcap or 11c

Thats right 11c!

To get there and match MINRES it needs to
- pay off all debt
- increase cash at bank
- increase production at this margin
- lower costs slightly more
AGO can do it and its undervalued, expect a run to 5c again if IO price stays around here.

Expand

Great post Samboy!
How about MGX, they produce 1/4 of the IO that AGO does and they have an MC of $565 M.
What they do have is cash, $400 M in the bank, and no debt. So if AGO pay off their debt and boost their bank balance, there is no reason why they shouldn't be around the 11 Cent price or higher. Within a few years they will be producing 20 MT/Y with the introduction of Corunna Downs and McPhee Creek, and enough IO resources in these mines to last 10 Years or more.

AGO Price at posting: 3.8¢ Sentiment: Buy Disclosure: Held
16 Upvote

0 Great analysis

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