Confidence Badly Shaken, page-2

I have been looking for entry for a long time but the news of the merger is definitely something forced on their hands. As you said short mine life and they have to look for growth prospects and not the green fields in S America but a bolt on. IOH offered probably the best solution but in a rapidly falling IO price probably not the best timing and I am sure management have contemplated seriously the impact of not taking this opportunity versus the short term pain of the SP.

With the cash component I presume is taken from the cash reserves of which it is the lowest among the mid caps in that region, my only issue is the sub standard grades that is attracting heavier discounting than normal and even with a lower AISC will mean margins are wafer thin. There isn't any positive trigger for the IO price to reverse besides hoping for extra stimulus from China.

As the IO price falls it is every reason for the big 4 + Roy Hill to ramp up extra supply just to meet the profit in $$ terms. This can only spiral to the floor prices and survival for the fittest. Unfortunately grade is king and you can only cut so many $$ and % out of the cost. Good luck.