My $20- per ton was an education assumption based on average price/margin they were receiving in the first half and looking at general iron ore price average in the same period. Then comparing to the av price iron ore price in the second half and figuring AGO will be receiving the extra as pretty much pure profit as expenses will remain around the same level.
I figure the price should be up within 3 months and have bought myself some more AGO and ventured into buying some AGOOA as a high risk play with nominal downside levels. Hoping to see AGO around the 11c level soon and feel that the market will play catch up should iron ore prices remain or fall no more than around 10%.
It is not good they dont fully benefit from the rise due to hedge but i figure the hedging may only be a nominal portion so many price rise benefits will flow through and also give them the ability to hedge some for higher prices for the next 12 months to mitigate further iron ore price drops. Looking further to the next quarterly to see for sure.
I love the technicals but in lamens terms i am assuming 16 MT * $20- = $320- million with no full on analysis. That sort of money will knock over $100 million debt in no time. When I look at current market cap $350 million it gives me that SBM feeling. SBM was also priced for failure and was about 10c, 1 year later 50c, 1 year later $3.50, debt repaid and now a cash cow. I see no reason AGO cannot do a 1c, 5, 35c but the final figure may be a year away and depends on current prices holding up.
AGO Price at posting:
3.8¢ Sentiment: Buy Disclosure: Held
