They will be down to around 10 mtpa with closure of some mines soon, even less for a while until they get Corunna Downs up and running which will cost them circa $50m, last time I checked their net debt was about $38m sure that has probably changed since last reporting, but on the books right now you've got $50m capex needed and $38m debt...that's $88m needed ...and they've also opted to change the terms of the loan and have it extended rather than pay it off, due to needing money for Corunna Downs, resulting in at best even more dilution with another $5m worth of shares having to be issued to the lenders...not that another 15-20m shares is much when you have over 9.1b on issue.
There all-in-cash-costs are around $50-55 wmt, and due to having their back against the wall big time they've had to hedge their prices in case the price of IO falls causing them to not be able to take full advantage of the rising IO prices ...avg. realised price was $66wmt....thats about $10-15 profit pt.
Adding to that at one stage more than half their 9.1b shares was in the hands of toxic debt holders that have recently been climbing all over each other to get out the door with the increasing SP and while IO prices are in AGO's favour, so their MC would be a lot higher if this wasn't the case....must remember it did recently hhead to over a $400m MC before these debt holders pushed it back down...which was in the area of 6 x NSL's current MC.
But the biggest issue is the market is forward thinking, and right now this is how they look:
-9.1billion shares on issue(and soon to be more) many in the hands of toxic debt holders
-can't fully capitalise on increasing IO prices whilst in debt due to the risk factor
-$88m needed to pay debt and get next project up and running
-decreasing production output with some mines shutting down
-profit margins of only $10-15 pt due to high all in cash costs p/wmt
-first and foremost and the biggest risk involved with AGO is the fact IO prices don't have to drop that much and they're totally screwed, they have sweet bugger all wiggle room to stay afloat, LT AGO holders learnt that the hard way when they went from about 1billion to close to 10billion shares on issue to avoid voluntary administration.
now compare that to NSL's capex, no debt, all in cash costs and profit margins, growth rate, and the fact the market is forward thinking and most AGO holders would be better dumping their shares and jumping in NSL
NSL Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
