Ann: Presentation - JPM High Yield Conference , page-2

A few comments on the roadshow presentation ATI just released. There's a bit of smoke and mirrors, but at last they have come clean on a few significant items.

slide 11
Plant running at 12% now, and aiming for 15% end of February. At least now we have a clear idea of how bad it is and how far we have to go.

slide 11 and 12
$9M capex to get them to 79% capacity by end of June. Looks good, but it's hard to take seriously. Honestly folks, $800M+ and several years gets us to 12%, and another $9M and 5 months gets us to 79% of capacity? This is more of a wishlist than an actual plan

slide 15
"Iron ore contribution to the business going forwards to be driven by future iron ore pricing". Any ideas what this means? It means that ATI needs higher iron ore prices to make a profit on this by-product. Seems hard to believe since iron ore prices are about $150 per tonne. But ATI's product isn't great and would sell at a substantial discount. And they have to truck is 500km, so costs are very high.

slide 4
"long-term" cash cost $US15/kg, including iron ore by-product credits. This is the smoke and mirrors. Without iron ore credits it's about $US25/kg. And that's using a long-term f/x rate of about 0.85 If you plug in the current f/x rate, then the cash costs before by-product credits are forecast at about $A30/kg.

other slides
Long-term vanadium looks solid. Problem is that ATI doesn't have the financial resources to keep going for several years waiting for the long-term to kick in, and they have $300M in high yield debt. We just witnessed this in the past three months with ATI's near-death experience.


So let's summarize ATI's investment proposal for this roadshow:

We want more cash so we can fix a plant that's currently operating at 12-15%, so then we can produce vanadium at a cost of $A30/kg, so we can sell it at $US30/kg. And we will stockpile millions of tonnes or iron ore product in the hope that iron ore prices climb well above $150/t in the future. So it's breakeven right now, but we could make huge profits in future years if vanadium and iron ore prices go up. And we have $300M in debt, so we have to keep raising funds regularly in the short term.

I don't know anyone who would put money int. And I am absolutely stunned the MD just kicked in $5M+. He must have a new story or project lined up for ATI.