Agree totally there’s easily funds for $120M of UG and also...

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sharky1

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08/06/22

15:34

Post #: 61896850
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Originally posted by gaz: ↑

I am thinking they will surprise to the upside and we may get another 10 cents, my rationale on that is as follows.

They do not have an immediate pressing development that's requiring a large amount of capital, Savage underground is in DFS and can be developed for about $100 to $120 million, they have about 4 times this amount in cash, Southdown is being further optimized as it heads into its DFS, the open cut extension works are being funded as it goes, so until the first two require a decision major capital not required.
I think management wants the company in the ASX 300 to give it more creditability, especially when it comes to seeking finance for the Southdown project, remember our CEO has performance rights linked to a complete executable finance plan for Southdown, these expire the 30th December 2024, see table below.
I do feel Shagang have pulled some strings and asked for more money, China's economy hasn't been travelling too good for a long time now, they had the forced shut downs for the winter Olympics, then the housing developers started defaulting. The latest mass lockdown hasn't helped lately either, they have also taken over a few old technology ex-government steel mills that required major upgrades to meet environmental standards, all at a time with limited cash flows.
The pellet ore price has held up really well considering all the negative news from all over the world, we averaged $307.72AUD for Q1 and my records have us at approximately $287.61AUD for Q2, our 2021 yearly average was $276.17AUD and they paid out 22 cents for the year, so with ore prices staying around these levels we will exceed last years average.
The world is now demanding greater environmental outcomes from business's this will result in more pellets being used in steel making to reduce pollution, I really can't see the demand for high quality pellets reducing into the future, this should give management confidence in the business's earning ability well into the future especially with both projects above indicating significant C1 reductions once operational.

Anyway just my thoughts DYOR, and good luck to all.

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Agree totally there’s easily funds for $120M of UG and also $150M for 10c div
GRR Price at posting: $1.75 Sentiment: None Disclosure: Held
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Agree totally there’s easily funds for $120M of UG and also...

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Agree totally there’s easily funds for $120M of UG and also...

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