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10/08/14
20:44
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Originally posted by gg99rush
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Do not rely on facts and figures below as I am horrible with details, didn't really scan all announcements and am not an accountant or an expert in any way....
I am really happy Ansteel are our partner, I think if this was a "domestic" partnership we would of been in liquidation long ago but just an opinion.
The valuation of KML will be interesting the entity had equity contribution of ~1.389 billion according to the June 10, 2013 announcement when Ansteel added the 60 million.
Then September 25, the 230m additional announcement, lets just consider equity for the fun of it knowing its debt that can be converted. So now we are up to 1.619 billion if you count it as equity I will remove this below and keep it as debt.
Then there was a debt announcement arranged by Ansteel for ~300mm and I believe the previous debt was ~1.6 billion (chinese development bank not Australian thank you again Ansteel) so a total of ~1.9 billion. If we consider the 230mm above debt it goes up to 2.1 billion or 2.2 billion and equity would then reduce to ~1.4 billion.
So Karara has put 3.5 billion or 3.6 billion of equity/debt into a remote midwest region creating jobs, revenue and a product. I think we should recognize that partnership in creating value in Australia. If they didn't come along there would be no jobs and iron ore sitting in the ground, how does that help us?
So with that out of the way, where are we heading tomorrow? Or in other words what is the 1.4 billion of cash put into Karara worth today? I have no idea as there are too many assumptions to model. When you talk about the movement of iron ore and FX I would guess you measure that via volatility and the ability to call the production noting the amount of fixed expense your are idling. For the fun of it I am going to take a guess and say that the Karara entity will be valued at an equity amount of 500 million. That means the Enterprise value is ~2.6 billion to 2.7 billion. Does anyone know what the net working capital amount is as I would reduce that from my 500mm number above.
We will find out tomorrow, but I still think this is just an impairment no one wants to buy and we will then idle for another year. Good luck and I will hope for the best tomorrow like everyone else.
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Very good post gg99rush, tell me how do we value the stuff in the ground, which is being handed over as well, 40 years worth of mining if not more. In a nut shell GBG are selling the farm to Ansteel and below the surface is were the real value lies and if that's not factored into the mix next week I'd be asking a few hard questions.
Best of luck all, think its going to be a very good outcome just quietly. As I mentioned before without GBG's 8 years of hard work Karara wouldn't come about on just Chinese funding alone, it took / needed an Australian entity to achieve what we have today.