It does if you assume 1) the io price is going to fall at some...

It does if you assume 1) the io price is going to fall at some time and you aren't sure when (which I do think Nev thinks - though of course I am not sure), and 2) that FMG can renegotiate any of the existing debt tranches including the 2019 stuff for better rates of interest.

Keeping cash on hand (or in term deposits, 90 day sort of stuff) still reduces their net debt. They still make progress on their gearing targets.

They could probably renegotiate their 2019 term b loan right now, by going to the Chinese and saying give us a better rate than 4.5% and well pay off the term b, immediately and transfer our debt to you.

But if they wait until the higher interest tranches can be repaid (april 2017, march 2018) instead the advantages are greater. The less it looks like they actualy need to refinance the better their rate.

I think the thing you are actually finding hardest to believe, is that it is possible Nev believes the io price might be 50 - 60 longer term.