Reading through the annual report for FY 17, a couple of points...

Reading through the annual report for FY 17, a couple of points jump out:

• No meetings of the Company’s Board of Directors were held during the year ended 31 December 2017. The irony is that GBG paid two KML Directors $57,750 each to be alternate Directors on the GBG Board
• KML's cash flow forecast as of the date of this report indicates that KML is projecting cash operating surpluses for 2018and 2019 but will not be able to fund the repayment of the debt facilities and pay the scheduled debt principal and interest payments under the Senior Debt without the provision of further funding by theshareholders, and/or renegotiation and/or extension of repayment/payment terms of the debt facilities
• KML has received a non-binding letter of comfort from Ansteel stating its willingness to support KML’s successfulperformance and confirming Ansteel’s intention to arrange funding to meet KML’s forecasted 2018 and 2019calendar year funding shortfalls and requirements; and
• KML has historically received financial support from Ansteel (through its subsidiaries) and the Chinese BankingSyndicate (or a number of members of the syndicate) for provision of additional funding facilities and Ansteel hassuccessfully provided or arranged (and guaranteed) these facilities as and when required in the past

Total debt (current and non current) stood at $4.1 Billion, this is about $200 million up YoY. Finance costs are $163 million per year, up slightly on the year before. Cash flow for the year was improved but still negative down from $365 million to $299 million.

So debt continues to be an issue. Its going to take the average realised China CFR 62% Fe fines spot price that is consistently above US$80/t before KML will get on top of their debt or to reduce their costs substantially. Unlike FMG I am not sure these two defining indicators are likely in the near term.