I got a copy of the 2017 Karara financial statement. They had...

I got a copy of the 2017 Karara financial statement. They had total debt of AUD $4.121B which is $2.91B USD. The interest on those debt is around 4%. The $2.91B includes a 6% interest $130M shareholder loan provided by Ansteel which allows Ansteel to dilute GBG ownership from 48% to 38%. It also includes a $100M shareholder loan which is 0% interest rate, which I believe GBG provided $50M and Ansteel provided $50M.

Assuming shareholder loans are forgiven and converted, the real bank debts are at $2.68B. With 4% interest rate we have $107M USD per year of interest expense.

Sales of magnetite concentrate generated revenue of $872.0 million for the financial year (31 December2016: $607.3 million), while operating costs including depreciation and amortisation of $114.9 million, were $888.8 million(31 December 2016: $855.3 million).

Duringthe financial year, the average realised China CFR 62% Fe fines spot price was US$71.28/t, an increase of US$12.83/tcompared to US$58.45/t for the 31 December 2016 financial year.

This means that Karara made $98.1M (US$69.36M) operating cashflow in 2017 when 62% IO was at US$71.28. Now 62% IO is at around US$84. At 8M ton per year that should generate an additional USD$101.76M per year in additional cashflow. This means Karara probably will make about US$171M of cashflow and pay around US$107M of interest expenses in 2019. That's US$64M of cashflow per year to work towards the principal.

A $2.68B 25-year mortgage at 4% rate has payment of $169M per year. Karara can pay off all its debt if it is structured as a 25-year fixed rate mortgage assuming IO market stays the same. Then Karara still has another 100 years of IO reserves. It is foolish to sell all of it to Ansteel for such a paltry sum.