Last Chance under 70c, page-48

A few observations from the half-year:

1) Delay in IO sales from KI until April 2019. The weather conditions over the next 2 weeks looks promising so I'm not expecting any further delays beyond April. I do forecast a drop in the IO price in the second quarter to USD 70 for 62% FE. It appears the major benefactors of the Vale disaster will ultimately be RIO and FMG shareholders given the material contributions to EBIT.

2) No interim dividend or buyback (given share price performance over the last 3 months) was the right move. The greed inside of me would've loved to see shareholder returns, but I agree with management that this can wait until KI sales resume.

3) Shareholders were slightly diluted during the period from the increase in share count from the DRP and LSP's. I think all shareholders should be mindful of companies who utilise DRP's as forms of capital raisings.

4) The auditor (Ernst & Young Perth) either has significant concerns with the future prospects of KI, or are unable to properly audit a set of accounts. In my view, it is ridiculous the company is not recognising the value of its deferred tax assets (AUD 70 mill as at 31 December 2018). A please explain is required on this point from the auditor and the company as this would mean the accounts are materially misstated.

Overall, I classify the result as fair. No way did this shoot the lights out. I appreciate these forums have people who would love to make a quick buck. I expect the share price to trade between 60 cents-70 cents until we see the Q3 results in April.