African Min. Share Discussion Threads

[bad robot] 09/11/2014 12:34

My new target is 2p end of year.


0p Feb 2015



In Level 6 We Trust

[substp] 09/11/2014 10:21

Wanted to share this:

positive cash flow

Definition

Normal situation where the cash inflows during a period are higher than the cash outflows during the same period. Positive cash flow does not necessarily means profit, and is usually due to a careful management of cash inflows and expenditure. Persistent and large positive cash flows may indicate the firm is not keeping enough stocks of raw materials or finished products, and might be losing sales due to shortages.


Read more:

[substp] 09/11/2014 10:18

I'm curious how the chemical impurities and processing charges have/will change. In the 2013 results it shows a cost of @ $13pt on a volume of 10.8 million dry metric tons.

Three things that I think should affect this even more as time goes on:

1 increased volume

2 "ramp up of the new +9Mtpa 1G processing plant, allowing the Project to de-commission three smaller, more costly plants;"

3 desliming should increase the value of the product.


Also point out that the company plans on a cash cost of $30t at by the end of 2014..... Less than 2 months.

It would also be nice to think that the collapse in oil prices (so far) help in the costs of power production and freight expenses which I understand jump around all of the time anyway. Also would think that the freight rates will stay competitive due the economies lack of strength.

But I think it will take the Hematite in full production to balance things out until the rise in IO prices which I personally think won't come very soon.

LM will help.

It's not as if the company hasn't got the means to stablise but it will take more time and money. They will need a helping hand to meet their goals.

[substp] 08/11/2014 23:37

They have copied it from earlier releases a few days ago.

[kulsan] 08/11/2014 21:05

What makes you so sure?

[kirk 6] 08/11/2014 20:38

Blue day at last Monday!!!

[newswseller] 08/11/2014 18:18

Before the cost cuttings it was shown to be 69$ (IR figures) I'll see if I can dig out the post tomorrow

[kirk 6] 08/11/2014 17:28

London minings costs are much higher than AMI and ami will benefit from london mining deal

[mcyi9gl2] 08/11/2014 17:19

London Mining (now Timis Mining I guess) mines 63% ore which sells at about $20/tonne more than AMIs 58% FE. Plus Timis is negotiating to use AMIs rail link so Lond / Timis Mining will get significant freight saving.

[shimmysham12] 08/11/2014 16:34

If thing are so bad why has timis spent 70m on lond which makes even less per ton than Ami. Don't understand.

[casual47] 08/11/2014 14:19

Iron ore freight rates have been going up due to higher demand from Rio/Vale needing more ships to freight their increased output. Looks set to continue.

Has AMI hedged itself on freight?

Should AMI pull off their refinancing and possibly even selling a minority stake in Tonkilli then we should be able to take the long view here.

[kirk 6] 08/11/2014 14:13

So why take on he London mine then if they can't make a profit?

[earnestwipplethwaiteiii] 08/11/2014 13:09

That article was almost two months ago.

[mcyi9gl2] 08/11/2014 13:05

Numbers aren't way off I'm afraid. Roughly we have $23 freight (actual freight in H1 was $26 but some reduction is expected from de-sliming and chartering own vessels); $34 C1 costs (actuals in H1 were $39 but we expect some savings and $34 is I feel a balanced estimate of what will be achieved); $7.5 all in costs (SG&A and sustaining capex); $11 other (reprocessing, impurities etc; prior actuals $17 but reduced due to stopping discounts and benefits of de-sliming, removing lump blend and A32 etc). All of that comes to $75.5. Current IO price for 58% FE is $63.0. You could make more aggressive assumptions on cost reductions etc (although the above is imo balanced and reasonable estimates) but no way in the world will they be cash positive at current IO prices.

[substp] 08/11/2014 13:03

Well that was short... LOL

A "friendly" reporter?

:-)

[newswseller] 08/11/2014 11:43

Those numbers are way off, refinancing is for at most $700m to replace $250 PXF and then $300m for the hematite plant, then 150 as a buffer as confirmed by IR.Since they hope to be cash flow positive at current prices how can they loose $200m a year, when debt repayments are 10.4m a month (this is not all interest), which is what they want to replace anyway

[substp] 08/11/2014 11:12

I don't believe there will be a miracle rise in IO prices for some time to come.

I am hoping Standard Bank will be able to come up with a refinancing package.

Need to see if their cost cutting is really happening.

Will synergies from LM be that big? Also will take time to finalise and set the infrastructure that will be needed (siding or line into mine camp). Equipment to move and blend?

But all of this together could keep their head above water until improvements in the economies happen.

[cantrememberthis2] 08/11/2014 11:12

dont forget debt is in dollar - smaller beer in sterling £pounds!

Its all down IRON ORE / COST REDUCTIONS / REFINANCING

Any of the 3 improving means we will be fine

I hate AIM but this is no minnow - rather be bought out at 50p takeovere than go bust!

[mcyi9gl2] 08/11/2014 10:59

Lots of talk about share price manipulation but the fundamental problem AMI have is that at current prices I think they are set to lose about $200m over the next 12 months (even after taking into account estimates of income relating to the deal with London mining and lower freight costs from shipping to Europe). Add onto that debt / interest payments of c.$220m and $300m for the new Hematite concentrator then I think they need financing to the tune of $750m. The requirement could easily be more (up to $1bn) if stress tested against further declines in IO price or contingency against achieving planned cost reductions etc.

AMI probably have enough cash to take them through to the end of the year but if they don't get this financing then this will go the same way as London Mining (i.e. into administration), and I think we do have reason to be concerned about progress. This is why the share price is dropping. The announcement on 15th August advised that they were working on financing and the interim statement was delayed whilst they put in place the plan. There was an indication that financing would be announced with the interim results on 30th September but the current status seems to remain that they are still working on it.

So in short, to hold up the share price we need an announcement that management are confident financing will be secured. Saving that we need a quick rally in IO prices (back up to $90/tonne would be a game changer) but obviously we can't bank on that and need to plan based on current prices. The only other potential saving grace would be a takeover (e.g. Glencore) but given the current debt and the level of further investment needed (i.e. $600m debt + $750m investment needed) I'm not sure future cash-flows (based on current IO prices) would support any acquirer paying a significant premium to the current share price (i.e. an acquirer would have to assume higher IO prices).

[substp] 08/11/2014 10:47

I believe they can and are making companies share price (Mkt Cap) near to worthless.

[kirk 6] 08/11/2014 10:33

Terrible predictive writing lol. I meant a shorting limit on the stock. If you could short indefinitely then most companies would be bust