Ann: Consolidation of Mining Services Contracts, page-18

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  1. 3,210 Posts.
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    Rcman

    Average interest rate on loan facilities stands at 5.30%
    Guidance = 160.0mt ore mined and sold
    Interest saving = $1.4b @ 5.30+ USD$74.0m or $0.46 a mt

    Being more conservative let's examine a more realistic short term scenario?:

    1 - Ore mined and shipped does not increase past 16.0mt
    2 - Quality of ore grade does not increase and discount is as high as 20.0% of Platts 62.0% index
    3 - Downers contract cost saving = USD$3.30mt on 59.0mt, which equals = USD$1.20 overall saving per mt on 16.0mt output.
    4 - IO price (currently at US$62.00mt, increases by $3.00 to $65.0mt and averages at this price for some time as a minimum. Additional profit = $3.00 @ 80.00% = $2.40mt
    4 - USD/AUD drops to $0.75 from $0.78 a drop of $0.03, saving $0.25 * 3 = $0.75mt

    Additional profit based on above:

    Increase in IO Price by $3.00 = $2.40
    Dollar decline by $0.03 = $0.75
    Downer Contract saving = $1.20
    Total = $4.35

    Based on the above scenario which us using conservative assumptions in the short term, cash profits would increase by USD$696.0m ($4.35 @ 160.0mt)

    Any further cut costs or reduction in discount allowed from say 20.0% to 10.0% would impact the cash profit significantly

    PS. Lamb on spit at my place once price gets above $4.00 (remember the good old days when it hit $6.00 (with yours truly not taking the profits) shortly after this wife stopped serving Greek food and I was force fed Spam.
 
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