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Cheers Fitnfam, greatly appreciate the effort you put in here.

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ausheds

19,584 Posts.

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22/01/16

22:50

Post #: 16854318
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Originally posted by fitnfam ↑

Prominer,

I still only own ARI shares because it owns Moly-COP.
I know a Coca-Cola type business when I see one.
The rest of ARI will make money,often more at times,but that gives only Boom Bust erratic cyclic business value.
If I could drop off the rest of Capital intensive ARI at a profit I couldn't be happier.

Many Moly-Cop Bollocks valuations bandied about by I guess paid players in the media appear to be based on plant value only and basic income and deliberately lay doubt about the overall value of the business.

I take a very Buffet view.

What's the value of a GILT INFLATION ADJUSTING BOND PAYING SHEDDING 10% CASH FLOW as a business with almost no competitors?
Govt bonds paying 3%,back work Moly-cop at 10% when its earning 14% on invested capital at 5% growth in the Americas.Forget the thrown in rail wheels and other cyclic stuff.
You need a near drug like addictive simple product to achieve that with MUST BUY CUSTOMERS.

Hence the comparison with Coke-both the legal and illegal types.

Do a 10yr forward Cash Flow analysis of Moly-Cop and you realise whoever owns it in 10 years time will be sitting on a simple boring low labour money machine that has more than paid well over a $3bn cost of obtaining with free cash flow having paid its cost back on top of a very annual return ongoing.
The upside for a NEW OWNER is the other 50% of the mining world it doesn't sell to with Global miners saying "supply us now from your now surplus 20% extra capacity,so we can be more productive and reduce costs" thanks to the new SAG Ball.
I would not be surprised to see a CHINESE BUYER at the forefront of due dilligence, paying top dollar if it is sold taking a march on Western contenders.

Just a pity I can't write that sort of cheque, but there are plenty of others who can for that very reason.

Iron Ore is a dead duck for a year or two and HAS HAD its boom.
Costs will fall along with production OR Its Cost will fall with increased production from cheaper sources.I pick the latter.

The real negative is Contracts,Rail and mining and having to wait until they slowly expire.
Why would a steel mill and its mining division be too scared to own its own trains and update them with say 10-20yrs old Loco's for next to nothing in comparison to the excessive costs of new, without having to pay Top Dollar on top for new shiny Loco's run by a contractor with their margin on top.

I could go on.

cheers
Fitnfam

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Cheers Fitnfam, greatly appreciate the effort you put in here.

ARI Price at posting: 4.4¢ Sentiment: Hold Disclosure: Held
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