Iron ore price, page-55

I do agree, if we settle in a range of $70-80 we are looking great, so in aussie dollars IO could average say $90 and we might get $75 - purely a guess on my part as the annual report only shows C1 cost and total costs. With our total costs of $50au then we (potentially) have a margin of $25au. Let's say they can produce and sell 3mt this quarter, (should exceed that) we are looking at cashflow of $75m. Currently we have net debt of $75m.

Ok - only back of envelope numbers used but AGO is looking a fantastic bargain at 2cps. Currently as it's been pointed out, 2 of 3 mines are short term earners but for the next 18 months they'll be churning out similar numbers to last years 14mt p/a, but if you care to look at the May presentation, AGO have matters in hand - two more low capex mines to come onstream, with slightly higher costs but much longer mine life. So, the future from 2018 looks to be 10 - 18mt depending on how quickly they can bring the new mines online.

The larger high capex projects look damn tasty long term, but I don't imagine AGO will want to go down the track of high borrowings again, preferring to stay nimble and live within their needs. AGO really need to attract a major but BHP FMG and RIO all have great reserves and I can't see them being interested, but you never know - a JV would delight and surprise the market, as would one for their lithium at Cisco.