I would suspect if commodities were to retreat even further that the AUD would not be on parity with the USD.
At 90cents:
Spot Price (62% fines) US$100 = AUD$111
GBG will also get a 10-20% premium on the fines spot price due to the magnetite concentrate having 67-68% Fe content, and lower impurities. This is part of the offtake deal with Ansteel. People on this forum need to understand this is a COMMERCIAL ARRANGEMENT. Ansteel DO NOT CONTROL the price that GBG's ore is sold.
So: US$100 + 15% (medium range) = US$115 per tonne of Karara Magnetite.
Convert to functional currency: AUD$127.78
Operating cost per tonne: $68
Cash Margin: $59.77 (excludes interest, depreciation, general admin etc).
Not bad considering GBG will be producing 8mtpa of concentrate, and 2mtpa of DSO (GBG entitlement, ie shareholders = 50% so 4mtpa concentrate, 1mtpa DSO). I don't know the DSO margins off the top of my head, but I assume they are roughly similar overall.
GBG Price at posting:
51.5¢ Sentiment: Buy Disclosure: Held
