Ansteel may want to buy out GBG - but I think that would be...

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albalad

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24/01/18

14:00

Post #: 30532159
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Originally posted by valueadd ↑

A very good summary I think .
Assuming your profit projections are correct .

But something else ...... GBG value Karara at "zero " - so it begs the question "IF Karara starts to become profitable - How much is it worth ? "

Thats probably a fairly complicated question to answer , as there are so many impacting variables . I seem to recall that the original specs on the plant were for a potential 30 mt p/a capacity . Will it ever produce more than 8 mtpa/ ? . Obviously it would have to come down to a valuation of the asset ( based on projected performance and life of production , less the purpose specific debt in place . )

We know that the plant and infrastructure all cost around 2.3-2.5 bill ( subject to level of capitalised interest & negative ramp up and commissioning costs .

Presumably when the project was first envisaged .... the vision may have been for a 2 bill spend , to produce a 5 bill plus return over 10 years +

Is there any possible case to say the project could ever be valued at 5 bill - less debt at 2.5 bill = net asset value of 2.5 bill . GBG's share @38% = $950 mill ....or approx 63 cents per share .

This all probably sounds like fantasy land stuff ..... however positively changing asset values , can eclipse debt to produce a large net asset position .

I am guessing that Ansteel will want to buy GBG out of Karrarra IF it ever starts to look sexy ....well ahead of any real operational and value turnaround .

In any event ....assuming the iron ore price stays firm ( a big assumption ) its not hard to come up with scenarios where the value of GBG returns to many multiples higher than levels in recent years .

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Ansteel may want to buy out GBG - but I think that would be subject to FIRB approval - so local investors would have a case to take to the government to make sure deal was fair and in the interest of the country.

GBG Price at posting: 3.0¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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Ansteel may want to buy out GBG - but I think that would be...

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