Ann: Scheme of Arrangement and Demerger, page-31

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gougou

12 Posts.

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12/03/19

08:45

Post #: 37727963
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Originally posted by gougou: ↑

I can't believe Australia will sell out such a strategic asset to Chinese for (effectively) a few million dollars. I am an investor with 3M~4M shares. Even though I made money on this stock, I was hoping to hold GBG for 11 more years until they pay off their $1.48B 15-year mortgage. At that point I believe Karara would be worth at least $1B if Iron Ore market is about the same as today.

Karara is making a lot of money now. 8M tons per year with about $38 AUD margin, minors ocean freight of a few dollars and overhead of a few dollars, Karara probably cashflows $20USD per ton right now. That's $160M USD/year of cashflow.

Their total liability is about $3.1B USD as reported on the last GBG annual report. However, some of those are short term liabilities, probably in the range of 700M USD and Karara will have about the same amount in short term assets (cash and inventory) to offset those. Karara's long term debt includes 1.48B mortgage + 300M bank debt + 400M bank debt + 230M Ansteel debt which is only about 2.4B USD. The 1.48B mortgage was borrowed in 2015 so Karara has paid it for 4 years which would have reduced it by about 300M. So I estimate Karara has about 2.1B long term debt remaining which may cost about 63M in interest per year. So right now Karara cashflows $100M/year.

You probably noticed that Karara has not borrowed any more money after the 300M + 400M bank loan in 2014. That's because they are cashflow positive, even through the tough years of 2015-2016. And they are paying off that 1.48B mortgage as well.

It is a disgrace that we do not get to see Karara's balance sheet anymore and we have to sell the asset blindly. A mine that cashflows $100M/year should be worth $1B and it should never be sold to Chinese for a few million.

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Sorry I didn't read the previous posts. My numbers are guesses so please rely on ASIC report.

GBG Price at posting: 2.6¢ Sentiment: Hold Disclosure: Held
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Ann: Scheme of Arrangement and Demerger, page-31

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