If a company strip ratio decreases from previous years while the grade remains the same, there is good chance the company is cherry picking the reserves. The other is a new deposit has been found with a low strip ratio, unlikely in this scenario.
The company uses low strip ratio tactics to pay off the debt (and maybe give some dividend during this time), what is there left for the later years? Assuming price remains constant (say $1.5bil earnings generated P.A) the company will use 6 years worth of earnings to pay off the debt - 9 bil ( and pay 3% dividend per year as well). After 6 years the good stuff is gone, cost will increase (due to strip ratio) ever closer towards the constant price line, the shareholders (today's price) still need 82% payout to recover the invested equity. This is discounting NPV cost etc.
So yeah unless price goes up, good luck with this one and perhaps rethink the timeframe on pay back. For all the speculation the chinese buyers will step up, they are just as smart as anyone so unless their maths include something extra special it is hard to see a buyer emerging at current IO price (including future price trend).
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$22.10 |
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Open | High | Low | Value | Volume |
$21.99 | $22.22 | $21.87 | $84.79M | 3.834M |
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---|---|---|
2 | 9803 | $22.09 |
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Price($) | Vol. | No. |
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1 | 1400 | 22.060 |
1 | 2500 | 22.050 |
1 | 135 | 22.030 |
3 | 1485 | 22.010 |
Price($) | Vol. | No. |
---|---|---|
22.110 | 6540 | 1 |
22.130 | 107 | 1 |
22.150 | 1623 | 2 |
22.160 | 455 | 1 |
22.180 | 1850 | 1 |
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