just a couple of things to add to your working out ARI pays C5 (Cape rate) x 1.5 I believe for its shipping.
C5 rate is from Port headland I suspect.Last mentioned cost figure was $9 up 50%.
In the last set of financials there was a breakdown of debt facilities,940?m related to purchase of America's Grinding media and I believe the other figure was around $460mish for expansion since of Grinding media and recycling.
The company also said their av recovery to Platts was 91% from memory also.
I certainly don't dispute your assertions,just on mining costings alone ARI,is considerably under the wire and unlike others has volume and grade and infrastructure options,to alter costs considerably,that others don't.
Just as I suspect very few realize the income to come from Grinding media expansion and how truly profitable that is on a cost plus basis.14% return on the original assets purchased of $960m and added capacity.Of the 2000 odd employees lumped into this segment,very few are are actually involved in the manufacture of Grinding media and are carrying the rest ,such as wheels and ropes,awaiting better times or future rationalization.A 20% expansion will therefore mean more than a 20% rise in profits to $240m.I'm inclined to suspect twice that to $280mPa. Kamloops size intrigues me,does it mean they are gearing up to take a large contract from a competitor,with such a large expansion?Looking at who they don't supply in Canada given the tons involved,but DO elsewhere would make you wonder,if that's the likely scenario.
DYOR + DYODD How do you hide a valuable painting in plain sight?
By placing it in a cheap frame in prime view with many others and deliberately pointing it out to everyone saying " It's a nice copy nearly as good as the original I reckon."
ARI Price at posting:
76.7¢ Sentiment: None Disclosure: Held
