Summary : ARI's break even for Iron Ore production = $US69...

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!