I don't see much of a problem with ARI's debt it is well covered by consumables value and its income stream.
Nor do I see a problem with ARI's refinancing,especially given the amount refinanced against facilities it used to have falling due.Very much in line with the expected debt reduction from Steel asset sales.
ARI's gone from a desperate need of infrastructure and unfilled demand to complete infrastructure(or near) for its consumables.As a result Its also ensured no grinding media supplier can compete against it in its major controlled market areas that produces a nice steady 8% margin on sales.
It's also expanded its mining infrastructure and modernized its train infrastructure,benification and begun opening new mining areas,all without increasing its debt,by selling unproductive steel assets,as well as only spending cash the year after it has been earned.
Not only does this all add strength to the operations,but ARI can sustain a year or two of next to no profits from mining and still be well ahead of its 10yr rolling mining plan.
Most of the mining benification plant upgrades have a lot to do with reducing steel production costs,by using HG ore and reducing the need for as much mining.
That only leaves cash generation for debt reduction as indicated by management and paying divvies.
Where's the downside when you consider IO miners would really expect around a 10% margin historically anyway,rather than the 300% that s been seen in the latest boom.
DYOR + DYODD
ARI Price at posting:
77.5¢ Sentiment: None Disclosure: Held
