iron ore price, page-57

What a day hey. This stock is more volatile than my last three girlfriends combined!

Legume & er6n, my understanding is that the $75/t plus $20/t D&A is in relation to WMT. If it is WMT then the cost base would need to be converted to DMT to reflect the actual margins right. Moisture content is 6-7% so the the cost for WMT is $95/t then for DMT would be about roughly $101.65/DMT.

If you are saying the average sale price would currently be about $106.98/DMT Legume, then current EBIT margins are more like 5 or 6 bucks rather than $12.

However, I don't understand why the focus is so much on EBIT margins at this stage anyway. There is still a very healthy EBITDA margin and that means cash is still flowing in. Many people tend to forget that AGO is very much in the middle of expansion phase. 15mt/year to come shortly and looking reasonable that there will be a train load more than that in the "pretty soon" future.

The obvious question right now (at least for long term holders) is..is the iron ore price going to drift significantly lower and stay there for an extended period of time, or is it going to bounce back as fast as it fell? If it stays roughly where it is now with a stable $A and AGO can successfully execute their expansion plans without taking on excess debt then they will be very profitable. As D&A and other expense reduce and they shift production mix to a higher proportion of standard fines, an EBIT margin of $15/t would look close to achievable. If we start talking 30mt - 45mt in 3 years time then that would be a tidy profit to look forward to. yes, quite a few if's and buts, significant potential none the less

PS. er6n, the value fines are at about a 30% discount to the standard fines. If the standard fines price changes it is fair to assume that the value fines price should change in line to reflect that 30% discount rather that a set dollar difference being maintained.

GLTA