The only way it works is is if the acquirer wants to invest to ultilize reserves and port assets. A rail solution. An obvious observation I know, but how are much those assets worth?
The balance sheet says $1.67 but that makes assumptions that may have been the case historically but not so much going forward.
As for price I would guess somewhere between $1.20 and $1.60
One rational concern would be...
Why take on that risk of development when you can buy Iron Ore on market going forward. Supply is the not the problem anymore, maybe 3 years ago it was. AGO's share price was much much higher then matching those expectations. AGO's ore is not high grade which is starting to be priced at premium going forward as well.
'Control' is the other reason of course.
If you are waiting for a takeover then I think ARI is much better placed.
I also think if it was going to happen it would have by now.
At $1.50 a share that is $1,350m and maybe is better spent just buying a stake in FMG.
AGO Price at posting:
75.0¢ Sentiment: None Disclosure: Not Held
