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FnF i agree. the Feb 14 div was a blunder and the perfect time...

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hawkduka

877 Posts.

10/04/15

10:45

Post #: 15063312
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Originally posted by fitnfam ↑

Well,
lets see where you may reckon ARI got it wrong.
as buying the PK knob business did a number of things,including keeping their steel mill viable beyond 2017 and saving a truck load of shutdown,redundancy and site rehab costs.

1/Kept ARI's port to itself-remember those new facilities were going to be built thru ARI's inrastructure whether they liked it or not and would have opened up IO export facilities for other users and weren't planned to be able to handle ARI's narrow guage trains.

2/Upgraded ARI's port infrastructure -their old loader and facilities are 60yrs old and stuck at 7mtpa.Where do you think most of ARI's redundancies in this restructure will be and how much of that infrastructure was rusted thru after 60yrs?

3/introduced the blend up model for ARI's lower grade waste ore 53-57%FE that was otherwise worth nothing or would have been concentrator plant feed and has made or saved them considerable money in product handling.

4/The most valuable of things -bought time by making mining for ARI blast furnace economic.These are complex ore bodies they are now mining with a bit of everything thrown in,so it is only truly economic if processed and sold to recoup costs as mined.

4a/secured 569?MT of magnetite resource for future mill feed and processing in years ahead.What did FMG sell half its magentite project for to chinese interests?plus a free carry?

4c/allowed time and paid for upgrades to the Magnetite circuit which will now mean less mining as yields have risen by 200kt/yr and further improvements may allow plant to hit 2.5MT,possibly another 250kt yield at 67% FE for blending or pallets.

If ARI used lump instead of pallets for 80% of its feed(if their is no lump premium) then possibly 6-800kt of 67%FE could be available to upgrade lower grade ore to 60%.

MBR blend from 10 pits soon to be 11
with SI out of the picture there is every chance the tons could in the future rise to where they have been
800kt blended adds potentially 2-3mt at 60% blend depending on waste ore grade.
IK 67% at base of pit Better than SI's 63%.

The difference being-all thru new infrastructure and 60-80km to port thru ARI's own train and pumping infrastructure.

The only thing that has put the spanner in the works was The IO price,which has meant SI operations have ceased providing ore for blending 18 months earlier than planned.That's why the push to get IK ore moving.
I doubt BHP or RIO are making as much as they claim and able to produce as low,looking at their per ton profits from prior accounting periods.
Their spanner in their plans is FMG who are producing 200mt and that is their price breaker with a percentage Chinese ownership.

The upgrade to ARI's magnetite operations-cost savings firstly to mining and then steel.
The increased use of softer coal in their coal feed could be worth $15?/ton coal cost x1.5mt at a guess all adds up
18mo to 2yr shake-out and then stable pricing on IO.

IMHO-Mistakes -not doing a 1 for 5 share offer at $1.30 when shares were at $1.70 as a way of enhancing shareholder value and paying down another $200m debt and lifting NTA per share.
Rather Disappointing capital management - missing opportunities like that-that would have left everyone happy and undiluted.

DYOR + DYODD

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FnF i agree. the Feb 14 div was a blunder and the perfect time for a CR.

ARI Price at posting: 14.5¢ Sentiment: Hold Disclosure: Held
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