Hi miningnut, I couldn't agree more with your comment. Based on...

Hi miningnut, I couldn't agree more with your comment. Based on the current quarter, my estimate for the year is an EPS of over 4 cents per share excluding any changes in asset values. So a 1 cent dividend should be easily doable.

What I don't know is the hit the P&L will take on the deferred stripping costs that were capitalised in the past 4 quarters. It should be amortised over the number of tonnes to be produced in that area of the operation ( as per note 1q in last years accounts). Not sure of the impact.

Given the cashflows from the cash generating unit, it will be interesting to see what value the company ascribes to the non current assets.

From the 2016 accounts, the impairments in the non current assets should be reviewed (note 27):

The key assumptions used by the Directors in determining the recoverable amount (from Dec 2106 accounts) for the Group’s Savage River Cash Generating Unit were in the following ranges at 31 December 2016:

Assumptions 31 December 2016 2017 2018 – 2022 Long Term 2023
+ Iron ore pellets (FOB Port Latta) US$70.73 US$67.28 – US$77.64 US$82.5

AUD:USD exchange rate $0.7193 $0.7169 $0.7300

Post-tax real discount rate 9.10%

Pretax discount rate of 13%.

Given the FOB is US$105 and the sensitivity is US$19m (based on December accounts) for a US$1 change in pellet price, at estimated US$85 FOB this would result in a US$285M revaluation. (subject to discount)

This would be offset by a revision in the exchange rate used, to say $0.77 for 2017 ,which would result in a writedown of US$23m times 5, of US$115m.

Net a write up of US$170m or A$220m. Very rough numbers, as the total valuation model would need to be reviewed.

I would be surprised if the discount rate changes, given that interest rates have not moved and it appears to be on the high side, as it is.

It will be an interesting set of accounts for December 2017.

DYOR