That is not entirely true. The $111m is cash flow generated from operations not profit. Royalty payments is an over and above cash payment that has been excluded from the operating cash flow figure. Also, other non cash transactions (ie depreciation and amortisation which were $40M for Dec16 HY) need to be taken into account when calculating profit. Although cash flow generated was $80M in Dec16 HY, net profit of only $17M was recognised.
The company won't declare a dividend based purely on the cash flow generated unfortunately. There is still about another $350M of plant and equipment and mine development costs that need to be depreciated/amortised.
Having said that, yes cash is king. The sooner the loan is reduced to zero, then AGO will not only have $80M of cash reserves, it will also save $10M p/a in financing costs. Lets hope there is stability in the iron ore price for the next 6 months so we can achieve this goal.
Cheers
AGO Price at posting:
2.1¢ Sentiment: Buy Disclosure: Held
