I put averages of the 2H'13 forecasts for the last few months of 2013 into my KML financial analysis and with Exchange Rate of 0.915 and 62%Fe IO Spot Price of $US130 with many unconfirmed assumptions I got revenue per month of about $A87M and negative cash flow of about $A15M and that is before capital costs to correct the plant issue. So negative operational cash flow of about $A30M for GBG until year end plus 48% of the incremental capital cost whatever that is. If I'm correct (this is not investment advice -DYOR), the high IO price and better exchange rate is helping protect GBG from operational losses as a result of delays to nameplate - negative cash flow could be a lot worse!!
My gut feel is that the KML capital cost will be more than $A50M otherwise GBG could pay its share from its cash reserves of $A35M when the $A30M loan from Ansteel comes through. It concerns me that funding is not confirmed to cover the capital costs since this could delay completion. What I think we have on our side is a desire from Ansteel to quickly get KML to profitability so that they can stop bank rolling GBG ASAP. I just hope that KML have been smart enough to include sufficient time to secure funding in their 3 month estimate. sdo
GBG Price at posting:
14.5¢ Sentiment: ST Sell Disclosure: Held
