The announcement confuses this simplistic-financial-yet-not-so-bad-mathematical mind of mine, so it grabs a matchbox and calculates:
The announcement indicates a sales price of A$59/t achieved in April on 0.7Mt- based on RCMan’s analysis at an exchange of US0.7683 that is a US sales price of
U$45.32 achieved on the 700 000 t produced.
However if a put option is held at U$68/t for 1M t for this quarter- that is A$88.51/t albeit for 62%
On a straight monthly basis that is 333 0000 t or 47% of the indicated production for April. (I cant find any guidance for the actual forecasted tonnes) That means that the other 53% was at market- RCMan (thank you) price of AS83.67 per t.
If it was 62% grade we would have seen an average price of A$85.94/t
I can now work out the discount being achieved: A$59/A$85.94= 68.6% or 31.3% discount.
Is that correct or is that smell I pick up coming from the paddock?
In a strengthening iron ore market?
Sniff sniff?
AGO Price at posting:
3.3¢ Sentiment: Hold Disclosure: Held
