I have to partly agree with Peregrine, impairments should not have been unexpected and thus a statutory loss in my mind not overly significant relative to current shareprice.
The EBITDA and Cash Flows seemed relatively okay if not positive, the 35m cash covenant with a 100% cash sweep pay down over $80m in from my perspective keeps working capital and cash at bank somewhat tight in the event of deteriorating market conditions or working capital requirements.
As a holder I'm happy with hedging arrangements which limit upside benefit as they are shorter duration and there is more downside risk in IO movement, with (from my perspective) any sustained rally in IO prices benefiting AGO via sentiment - I would rather that than the exposure.
I don't like the USD forex exposure with the loan and that given the size of the loan relative to cash flow that a strengthening of the USD (and margin on IO production) would, it appears, be largely neutralised at this IO price range.
This as I understand leaves Oil rices as having the predominant impact on margin and subsequently cost reduction (especially given the trucking reliance).
So here's to hoping for IO at ~60; AUDUSD at ~.75 and Oil at <~50.. or current business conditions
Happy for people to correct me if they perceive I have misinterpreted any of this info, it was largely back of envelope. I don't want to make any forecasts on AGO though I'm of the perspective that they may stabilise at these levels, and at these levels over the long term i'm of the perspective that AGO is worth a bit more though to quote AFR around May - "not for the faint of heart"
AGO Price at posting:
1.1¢ Sentiment: None Disclosure: Held
