Margin expansion with rising TI and Zr

Hi guys
I though this is worthy of an new thread following on from the cash flow discussion
one will note in many of my posts I assume a margin of only 200 AUD when discussing IMAs cash flow but the reality is it may be higher

I will focus on the impact of the increasing TI and Zircon prices to make the point . As was documented TI in
increased 8% last year and Zr is increasing 5% from 1 April and the company expects Ti to sold at 300 next quarter

so let’s look at some numbers - remember AUd realised price was 530 last quarter when TI impact had not fully locked in

so Zircon at 1470 ( from 1 April ) assume 24% grade as per guidance for last 1.5 years equals 353 USD

Ti price of 280 x 60% contained grade ( I thinks it’s 62 but let’s be conservative) 168 USD

353 plus 168 equals 521 USD equal 438 USD equals 562 AUD . It’s about 570 is I take 62% Ti metal content .

note, zircon grades at present are higher but simply just taken average .

here is where it gets intesting

if I now assume Following TI of 300 and Zircon of 1540 ( one more increases ) please note the market is indicating forward sales have already started to be made at 300 for TI

so 24% x 1540. 370 USD
60% x 300 =180
550 uSD
x 84% metals content divided by .78 exc rate 592 AUD takes as nearly to 600 AUD realised price which make make margins back if to 300 and thus cash flow at 90 Million annualised

the company is expecting TI and Zr to continue to increase. I have only taken what looks to be the new TI level from 2ns quarter this CY and assumed 1 more 70 dollar Zircon price rise.
in reality both Titanium and Zircon could move a lot higher . Zircon and 1600 and TI at 340 will see record margins again


just wanted to make the point that increasing Zircon and Titanium prices are reinflating Margins. There is a lag affect as IMA would generally agree on prices for shipments to months out , but it will slowly become evident as the year rolls on