Atlas is doing around 16mt of iron ore a year and with the closing of two of the mines and opening of another with produce 12mtpa of 62% iron ore. So why the low share price? When I read the annual report and the quarterlies I notice that they are selling their product for $US55 per tonne which is near $US40 tonne less than the going rate. Why, because they hedged the price and locked it in. If they had of been getting the same price as everyone else they revenue would have increased by $US640m or $A840m. If that was the case the share price would be $0.23c not $0.03c.
When does all this change. Sfter a call to the headquarters I am advised, that the company willonly have 20% hedged by June 2017. They didnt say what the hedged price was but I suppose will still be the $US55 tonne. However, that being the case there should onl be 20% of 12mt or 2.4mt that is hedged with the balance to be sold at current prices circa $US92 or $A121 tonne. That equates to :
2.4m tonne @ $US55 tonne (current hedge price) and
9.6m tonne @ $US92.00 tonne (out of hedge (coked in price)
Revenue for next 12 months from June 2017:
2,4 mt @ $US55 = $US132,000,000
9.6mt @ $US92 = $US833,200,000
Total Revenue : ($US965,200,000 or $A1.27 Billion
Cash Cost Price based on recent costs $A34
Full Cost delivered to China.....................$A52 tonne
Bank Cash: $134m
Debt Total: $87m
Total Costs Mined and Delivered to China 12mt $A624m
Total Revenue:..................................................12mt $1.27B
Gross: $A646m for Full Year 2017.
Market Cap: $A284m
This Company could almost make a dividend of $0.03c a share which is its current share price.
Is there any analysts left in Australia? What do Aussie Analysts smoke?
We are all looking for the next big ten Bagger and this is looking us all in the eyes. Have I bought some shares in Atlas. YES. Like walking over Diamonds looking for rocks.
If this is not a "No Brainer" I dont know what is.
AGO Price at posting:
3.2¢ Sentiment: None Disclosure: Held
