ATLAS IRON LIMITED (ASX:AGO) - Ann: Landmark Deal On Costs - Mining Back On, page-93 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by tomboy ↑

Amateurs!

Value is not based on earnings alone. In fact its the balance sheet that determines earnings from an economics perspective, the larger the income producing assets and the lower the liabilities and current loan debt the better, this directly produces earnings and profit,

profit is not a panacea on its own, in fact to think that is foolhardy. You cannot make profit in a vacuum of no assets and no liabilities. Those massive tenements int he Pilbara and 5 working mines are large valuable going concern assets that produce a large income and now a decent profit.

Anyone who has tried to get a real estate loan will tell you serviceability is irrelevant if the net assets after liabilities dont add up to below an 80% LVR ratio. In fact a strong balance sheet and asset values create better SPs, just ask Apple Inc. with $190B cash at bank with no newly acquired bond debt.

So the West Australian Newspaper article last week was entirely incorrect as to an MBN like restructure. Tomboy was spot on with this call. Deal with contractors, large CR, no relisting till after.

There will be no MBN like restructure over 6 months wiping out 98% of holders in exchange for all debt to shares to bondholders/creditors. In fact the holders will topup and wipe out the bondholders, the other way around.

Message1 = dont mess with the cashed up AGO and its shareholders who are flexing their cash muscle and can wipe your debt anytime. Contractors will be rewarded if IOP rises, excellent, they are like defacto shareholders also.

Message 2 = debtholders, your time is up, your puny attempt to put AGO under has failed miserably

Message 3 = AGO will relist strongly and force all LTHs to take CR cheap shares and buy on market at reopen to average down. The CR will be heavily oversubscribed. The EGM will be a victory march for the board & Brinsden.

This is how you support shareholders and retunr to profit and a strong balance sheet. The MBN way would have created a cash machine no debt US bondholder controlled monster producer but wiping out the OZ holders in exchange. AGO didnt need that fort such a small debt, a large CR and contractor deals is all thats needed.

Hey presto, big jump on relisting i predict from all those that missed out on cheap shares of 5c-10c or even 12c.

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Tomboy

What rubbish you write about the assets determining a company's value as this statement ignores the returns those assets generate.

Quite simply if the asset price received from sales (iron ore price) is below the cost of production you can have 2 trillion tonnes of 100% IO and still go bankrupt.

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