roy management needs a boot to china, page-6

Further to my previous post about using CAP as the basis for my expectations for ROY, given the thimbs up for that post for those interested take a look at CAP's presentation for their AGM - in particular slide 7 which has a great summary of EBIT and EBITDA margins for a number of producers assuming $93/t @ 62%.

It is really interesting to see how some producers are actually losing money at $93/t and also how competitive the Braemar should be given wide mining widths, soft ore and access to infrastructure.

By way of brief summary, RIO and BHP (which are the benchmark low cost producers) have an EBITDA/EBIT of $47/40 and $40/34 for RIO and BHP respectively. That is in comparison to CAP's $32/22 (I think CAP got their EBIT and EBITDA numbers mixed up, but the actual result is still great). Remember, this is at $93/t @ 62% and if the iron ore price is $113/t you can add another $20/t to those margins which makes them very attractive.

CAP's AGM preseation has more detail on the reasons why Braemar should be low cost for those interested. Looking forward to ROY's pre-feasaability study which I hope will be similar.