confidence, page-3

Well I don’t want to be the only one blowing a dirty trumpet but here is how I see it.
I’ll keep my comments to myself after this.

Sentiment-

The rain has undoubtedly affected sentiment toward the company. It has been raining heavily again near the mine site with 243mm over the last 6 days.

(according to the most reliable source i can find)

http://www.bom.gov.au/climate/dwo/201403/html/IDCJDW8036.201403.shtml

Hopefully the most recent downpour is last of the wet season. Rain is annoying but not entirely unexpected.

Recent falls in the iron ore price have affected sentiment toward this sector in general. However, for WDR 2/3 of the company’s product being hedged at $120 for 5 years is a positive.

The share price has fallen to near yearly lows of ~60 cents in the last month. This has occurred on average daily volume of around 500,000 shares. With 500 million shares on issue, this is a very low proportion of the company’s shares being traded daily.

The company has the backing of some of the smartest minds in the country who have shown they are adept at creating shareholder value. They have displayed strong faith in the company by participating in capital raisings.

Having indicated that there will not be any further capital raisings in the near future, I wouldn't be surprised to see them buying on market if the price falls any further.

Production-

A higher than expected amount of ore was mined in the most recent quarter. Ore was also of a higher quality than previously anticipated. Rain has affected the amount of ore that has been crushed and shipped but the company indicated that they were still confident of achieving 2014 shipment targets. Additional resources have been deployed to help achieve barging targets as communicated in the most recent quarterly activities report. If rain has affected these daily targets recently, I would expect that the additional resources would remain in place for a longer period into the dry season to ensure they meet their yearly targets.

Forecasts-

Consensus forecasts indicate that the company will be on a P/E of around 4 and have a dividend yield of 12% by 2016. If there were a 20% downgrade to consensus earnings forecasts for FY16, this would still be an attractive investment IMO.

Many positives have been witnessed over the past few years for this company except for solid appreciation in the share price. I think that time is not far away.

I am forming my opinions using publicly available information and I just can’t see anything that would indicate that this is a poor long term investment.

I’ll look forward to the half yearly report and any criticism that anyone might have.

Till then, here's hoping it stops raining and that the share price goes UP!