JHUI am just trying to say that if the IO drops to $80 on a long...

JHU

I am just trying to say that if the IO drops to $80 on a long term basis then in IMO the AUD will also tank. if the AUD-USA exchange drops to 85 Cents the end result will be that GBG will still be positive.

Our loan is priced in USD and the commodities we sell is also priced in USD what drops is our cost base so if we sell 8MT at 80 USD and our cost is $77 in AUD we have the following.

GBG cost is $77 AUD before interest and royalties
That is equal to $65 USD assuming 85cents exchange rate.

IO at $80 plust 20% premium is $96 USD so there close to $20 USD difference at 8MT will cover interest repayments of 54M(this does not change with exchange rate) and still have about 100M USD left over for tax and royalties so even at $80 USD as long at the AUD follows which it should then its still viable. Long term IO is about $90 from the”experts” which gives you another 100M on top of my figures.

I know at the moment as Reddwarf mentioned the AUD has held up considerable well but prices only dipped for a few weeks and recovered dramatically so there was no real affect in the economy. If IO tanks then our Term of Trade will tank and we are running a two speed economy with the resources being our driver if that goes we have no driver and then we may need some QE as well to get us going again. So I think there will be a correlation between IO long term prices and the AUD exchange rate.

That is just my take at it with a lot of assumptions about the AUD and does not include the 2MT of hermatite in those figures.