Summary : ARI's break even for Iron Ore production = $US69 (audusd = 0.94)
Looking at Arrium Steel and Mining Consumables businesses combined...
FY15 EBITDA
Mining Consumables = $209m (FY15 production increase 90/1290 or 7%)
Steel = $58m (very conservative)
Capex (stay in business 50% of DA)
Mining Consumables = $26m
Steel = $50m
Total EBITDA = $267 less capex $76m
Cash generated = $191m
FY15 Interest = (93m)
So after interest $98m cash generated from Mining and Mining Consumerables
So we divide $98m / 13 Mt = $8 /t
Deduct $8/t from Arrium's Cost per Tonne
FY15 estimate cost per tonne = $AUD70 / t - 8 - $62 /t
Stripping guided at $8/t
Cost after Stripping (62 + 8) = $AUD70 or $US66 (0.94)
ADD grade discount from 62% to 59% of 5% (at the low end as their grade in closer to 60%)
So $US66 * 1.05 = $US69
How much cash will ARI generate at an Iron ore price = $US91
Using IO $US91 - 69 = $22 / t *13 Mt = $US286 ($AUD304)
EPS ($304 / 1366) = 0.22
Need to deduct $40m in tax for Mining Consumables overseas profits or 0.03 a share
EPS ($304 / 1366) = 0.19 !
If Iron Ore averages $US91 in FY15, cash flow 0.19 per share!
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- IO = $US69 is ARI's break even!
IO = $US69 is ARI's break even!
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