The Qtrly - 6 monthly -What will it say ???

Now that is the Question to ask ourselves - What will it say and mean?

That I think is responsible for the current share price pressure.
It is rather obvious that at current IO prices it is unlikely that IO will be covering its Capital reinvestment costs or its restructuring costs in their entirety from now on at CURRENTLY announced costings.
Although they should drop even further during 2016 Calender year as some contracts run-out and SI restructuring costs should be gone come 2017.

Possibly that loaded costs have reduced further below last QTRs $34Au.($35AU or $25Us overall y16 target)
Longer MBR trains -less staff - loading more onto vessels i.e. 3500T onto each Cape plus this QTR dryer IO to be loaded worth 20-30c US a ton drop in freight costs alone etc
Exports possibly were higher than planned,bringing overall costs even lower ???

Possible Dec Qtrly
Average realised price 3 months say $US40 x 80% = $36 dmt a decrease of $12US(expected higher than $40)
Average realised price $US36 x 1.44 = $Au51.84 a drop of $AU $11.16
$51Au -$34Au loaded cost = $17Au towards other costs
difference between loaded cash cost and total cash cost last QTR = $23.3Au -$17Au guess this QTR
nett $Au6.30 a ton less received than prior TOTAL CASH COST.

6 Monthy effect-
This is versus the $Au11-12 Cash Surplus in the first Qtr
Giving a half year Cash Contribution of around $5-6 a ton across say 5MT.$20-25m generated.

So a potential $6.30AU 2nd quarter cash cost shortfall could also be mitigated by lower US$ shipping costs -currently around $5US from Port Headland IO or Newcastle for coal,so how much dearer from Whyalla?
At the 1.5 Cape rate -$7.50US possibly instead of the $10-$14Us ARI has been paying in the past.
There has been some change in State Royalties I believe - so that could be up to $1-50 a ton.

So all in all Total Cash Cost currently could possibly be near neutral at current prices given changing circumstances including fuel costs for boats and contractors.

Given Steel Long Products market share one could expect a reasonable upgrade to income from growing contracts.
Lower cost for scrap and greater scrap availability due to exporting costs versus export $ scrap value.
5% growth in steel sales is $50m EBIT and a 100kt p.a. increase in steel usage from existing shifts- All likely to come from ARC furnaces and LOCAL SCRAP (read Sydney and Melbourne),not more billets shipped from Whyalla to Sydney or Melbourne by rail.So steel input costs considerably cheaper for marginal ton increases in those markets.

The $100m target for cost reductions at Whyalla must be well on its way,so Cash flow neutral to tending positive from now on.$25m cost??? giving $25m savings ongoing so far on top of the $35m banked already on magnetite stream and reheat furnace rebuild already done?

Steel in general throwing off more than its $50m Cash Flow of the past as a result.

Moly-Cop ticking over just nicely - thank you.
Producing say $100m Cash - less expansion costs.
I note the ramping up of tons processed by Aussie gold miners and spare capacity at Waratah -hopefully all hungry Moly-Cop customers as Moly-Cop takes on its local competitor DonHa with a Harder SAG Ball and anti-dumping measures against dumped grinding media from China. I don't know if its the importer or not,but believe there is an interest/input in a plant in China?

The future very much depending on STEEL and whether its local demand cycle will provide the CASH income needed to sustain ARI's other Australian operations thru their Cash-Flow needs.

I'm picking mining won't be as bad a many think and Steel will be providing local $AU cash to meet SI and its own restructuring costs,with recycling being slightly negative(falling value of stock on hand).

I would figure DEBT could be very much where it was give or take $100m although a switch in debt composition to $AU on fully drawn facilities if needed,while small amounts of US$ debt paid down as due and no increase in draw down there except for Moly-Cop expansion if financed.

Steels value should increase as $1-2m of costs goes with the departure of one executive,let alone new Tarrifs and its locked in position in Local long product steel production and innovative processing for construction supplier.
There is the other side of increased demand and although a 50kt increase (est of last 6 months at 5% annual growth) doesn't sound much,it will have a serious effect on finished stock turnover and days stock is held before sale freeing up considerable CASH.
So will closing those Metal Centres to date and freeing up their stock holdings for quicker turnover elsewhere and their land for sale.
Steel is becoming a lot more narrowly focused and leaner machine,defining its customers and going for them.
Cripes shipping raw steel to Perth and for on shipment after working by a customer to Brisbane for a building says how accommodating they can be to grow their clients business thru their freight system.
With all of this comes the positive margins from being leaner and meaner with narrower stock holdings and quicker turnover.

DYOR + DYODD -Debt Neutral - Possible or Very likely-?

Your Opinion?