ARI arika resources limited

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3.7¢

Survival of the sharpest ????, page-4

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21/03/16

08:45

Post #: 17324143
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Originally posted by fitnfam ↑

Even at $US56 IO isn't a goer for ARI now.
At least not with its existing cost structure.

It would enable ARI to run out its contracts and meet minimal investments required to keep the system running until they are gone, the CSL and individual mining contracts run out etc.
Every week it carries on the $380m cost to mothball mining gets cheaper and once shut down won't start up again unless IO hits astronomical prices to justify a business case for re-commissioning costs.
The odds of that happening anytime soon are between nil and you must be joking.

No doubt those around some hard decisions are wondering what the longer term outcome will be.
Reality is-floating $45-$60Us is not a viable business model to make any investment viable with existing costs.
$10-$15 less a year might be just enough to tip the equation,to running a profitable business.
As much as I would like Capes to steam up to the wharf,it doesn't appear to be on any ones schedule and I would guess that would be worth $5 a ton of costs.
ARI is a high cost producer,so unless Capes can steam up to the wharf,or costs drop lower,it will be better to have money used elsewhere.

Once ARI has Blackstone/GSO in control,it'll be all just about the money and the reality is, at $56 its just paying the ongoing bills and not making any money any time soon at best.

So unless anyone has any current doubts,mining is a terminal business under its existing cost structure.
If that goes,what else goes as a consequence in Whyalla.

As I understand it,because ARI mines complex ore structures and that means mixed Hematite and Magnetite ore bodies are mined and processed at the same time.
So with No mining - ultimately no pellet ore once stockpiles are gone -No blast furnace.
Without Blast furnace - ultimately no need for mining at all.
Those pellets have potential external markets and one could guess the filter cake is currently being trialed by those potential customers,while "Planned Maintenance" is undertaken on the pellet stream.
The steel mill was put on the block at the same time as Moly-Cop was- but no takers?

Is this capital raising really about having the $300m +$80 profit accrued from steel in cash funds available to shut mining down immediately -IF NEED BE???
With the mill to follow as a consequence of that decision when its stockpiled ore for pellets dry-up.
That is the way I have always read the GSO restructuring proposal.It even uses the words "and Restructuring Costs"for the use of funds.

Leaving ARI ultimately with a viable profitable steel business and Moly-Cop and $400m a year EBITDA.

Am I the only one seeing it this way ??????

DYOR + DYODD In my mind,it couldn't be spelled out to all concerned in plainer business language -
YOUR SURVIVAL - Pick your options YOU IN or OUT.
ARI will survive either way,so won't be held to employee/contractor pressure/community pressure any longer.
But bank pressure against holding on to continual cash consumers is rather high and ARI needs to re-finance debt and won't get it the way it is.The choice is blunt for ARI -----Make money or QUIT losers whatever the cost.

Expand

The ARI mining costs need to be under $40 a tonne, the current management don't have the smarts or the passion to get it there. All the labour, supplier and contractor costs would be at inflated prices, just not aggressive enough.

ARI Price at posting: 2.5¢ Sentiment: Hold Disclosure: Held
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Last 3.7¢		Change 0.001(2.78%)		Mkt cap ! $28.96M

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