opportunity: KML can produce very high quality iron ore ( more...

opportunity:
KML can produce very high quality iron ore ( more than 65% Fe).
In China, the grade of iron ore increase 1%,the consumption of coke can reduce 1.3%,what's more ,the steel producion can increase 3%.Until 10th March 2017,in China the index of coke is 1750 and 62% Fe is 650,the ratio is about 2.7.
So the the grade of iron ore increase 1%,the steel company in China can save at least $4 cost+more steel production.
Due to serious airpollution the goverment in China use limit the working time for steel company to control the airpollution,that's another reason why steel company prefer use high grade of iron ore .
the grade of iron ore increase 1%,the price add $4-$4.5.KML can produce 65.3% iron ore,compare with 62%Fe,KML can reveive $13-15 more/tone.
China have announced reduce 150Million tone coal at 2017,that will put very strong support for Coke price.The ratio of coke and iron expect still 2.5-3.So I think the difference in price of 62% iron ore and 65% iron ore can still get extral $12-15.
In Australia,only KML and Sino Iron Ore can produce 65%+ iron ore.this is only opportunity for KML.
Q3 2017,average 62% iron ore price is USD83-87,so the CFR price for KML can reveive nearly USD100/tone at March 2017 Quarter.


Risk:
1.Cost
C1 cash cost for KML is USD52,What's worse,the other cost like Royalty,Freight cost and financial cost are higher than other iron ore company.
for Freight Cost, port of Geraldton can only load Panamax Ship.This type of Panamax Carrier just load 60000 tones products.But port of Headland and Dampier can load capesize carrier which can load more than 1500000 tones iron ore.And the carrier from Geraldton to China is 2 days longer compare Headland to China, the Freight Cost for KML is nearly double compare with other iron ore company.
KML have USD2.5B debt,just the interest,KML will pay USD 100million means the fincace cost for every tone are USD 12.
The full cash cost for KML are nearly USD80/tone
2.Iron ore Price
the current high price of iron ore is unsustainable.If the Iron ore price will stable at the next 6 months,most of Mining company in China will resumtion of production and Rio,BHP,FMG,Vale and Royal Hill all of them are increasing their production at 2017,more supply will increase if the iron ore price cant down.
My forecast,62% Fe at March 2017 Quarter will be USD85. and at June 2017 quarter will be down to USD75.
And at Second half 2017 the iron ore price will down to USD65.
From this forecast,At the whole 2017,the gross profit for KML can get USD70million.In this situation, KML can still survive and An Steel will still give finicial support to KML.That's enough and i hope GBG can reach 5 cents at the next 1 or 2 months