re: Ann: Long term port access secured for ir...
I can't figure the muted response to this announcement. There are 3 legs to the WPG story but it is Peculiar Knob which offers both immediacy and the most reward over the next 12 months or so (I admit, a lifetime in these paranoid markets). Lets 'fly a kite' and look at some numbers (and please comment if you feel any of the numbers I use are unreasonable). - export sales of 62% fines to commnence at say 3mt 2H'2011 - assume opex costs $70/t - iron ore price say $150/t - margin $80/t at 3mt, gives gross cash flow circa $240m pa - net of corp costs, interest, tax, etc, free cash should exceed $150m pa - currently 120m shares, say another 50m issued to raise equity = 170m shares fully diluted - therefore, cash eps around 90cps - if prepared to pay 4 - 5 times cash, share price target in 12-18 months time $3.60 - $4.50ps. This for the iron ore alone. Add Rocket Range magnetite, coal and upside risk to the tonnage numbers above and I conclude that WPG is the wrong price. Yes, they still need to raise finance, but I think the Chinese customers/clients would see an opportunity here.
Comments welcome
WPG Price at posting:
59.6¢ Sentiment: LT Buy Disclosure: Held
