Just looking at their last presentation, there revenue was just on A$100/tonne last year, for as gross cash margin of A$28/tonne, and yet their statutory net profit was just over A$ 1 /tonne.
With the fall in the price of iron ore it is really difficult to understand what dream enhancing substances would be required to project a net profit ( ie "E" ) of $260 mm for this year.
My reading of the presentation is that the all in cash cost delivered last year of $77/tonne included royalties and freight, but excludes finance costs and D&A.
Taking this years cash cost guidance of 68 to 73 A$/t, and D&A of 12 to 15 A$/tonne takes us to 80 to 85.
Revenue perhaps A$80/tonne if the benchmark is A$ 98 ( after allowing for moisture Fe content and purity discount). I see NOTHING to allow for financing costs, therefore I will not allow anything for tax!
Looking to me like the 260 mm pa profit might just be in a posters imagination.
Perhaps the market is right. Perhaps AGO requires a substantial improvement in the A$ iron or price just to break even. Fair enough to invest on the premise of a price upturn if that is what you are knowingly doing, but it would be pretty silly to be investing on the delusion of current profitability that doesn't appear to exist.
Just the opinion of a poster with basic numerical and presentation reading skills,
EL
AGO Price at posting:
37.0¢ Sentiment: None Disclosure: Not Held
