All the squealing about increase in debt leaves me wondering.
If only those making the noise bothered to read the half yearly,they would have seen cash and receivables were $400m shy of payables.
So no surprise a rise in debt as a result and part of that would have been payment for $260m of capital expenditure in that period.
So to figure out that ARI are only $260M or so in debt at the end of this half says some recovery in cash flows has occurred.(allowing for exchange rate change on debt).
They had $2932 of facilities in DEC and have since reduced this to $2800m of which they have indicated nett debt may be around $1750-1800m.
I do not see any desperation in this.
Their capital expenditures are all but complete for consumables and mining is now based on a $50us price on 62% FE,not the product which they sell.
TOO MUCH EMOTION and not so much the facts.Reality is at $63us the current price they are doing quite nicely.
Being the fourth cheapest Aussie supplier doesn't hurt as someone has already pointed out.
Having options to up output if prices warrant to 11 mt is not a fiction from existing infrastructure.
Nor is the reality that Consumables will likely be making $300m within 4 yrs and Canadian steel supply will be totally committed to MolyCop.
None of this factors in the New SAG ball and the extra margins that will come from the same volume of product.
Just a pity the presentation wasn't specific in pointing out blankly their breakeven was based on 62% fe pricing.
Confusion helps no-one.
DYOR +DYODD
ARI Price at posting:
14.0¢ Sentiment: Buy Disclosure: Held
