Share
6,638 Posts.
lightbulb Created with Sketch. 366
clock Created with Sketch. 04/01/17
23:19
Share
Originally posted by rarebird1971
↑
Some great points there Rkon especially re the supply of VALE. AGO can currently produce IO for AU$49 per tonne The current IO price per tonne AU is over $100 more than double. You need to take into account that AGO dont supply 62% fe IO and the exchange rate fluctuations as well as fwd hedging (which protects on a falling price but hurts on a rising price). Rkon all I can say about the papers and the falling IO predictions is have a look at some of the articles from back in april may 2016 and their predictions of IO. How did they go? Not one got it right. I can recall from this year articles saying gold was going above $5000 ounce. I always trust my gut and try to invest counter intuitively to the herd as this is how to maximise profits. Remember that at US$54 tonne for IO AGO believe that they can return 100 million free cash flow per year. Once debt free I believe that AGO can use this sort of free cash flow to diversify, acquire, develop their lithium, etc. I believe that AGO will be debt free before we see these sort of levels again so I don't think we should panic if IO drops. If it does drop say to $60 US the herd will drop the shares in panic (at below real valuation) and I will simply buy more... Either way i'm quite comfortable with their position especially with an unannounced $75 million profit for the DEC quarter. All the best in the new year!!
Expand
And once AGO pays it's debt there is no pressure, furthermore I think AGO should save up some cash for the rainy days
... just saying. I see the same if we are now over $100/t and we can produce at $50/t then there is room for price movements.
