Why the lowe SP?, page-9

Not a dumb question.

I kind of wonder if the market understands what it is that AWC actually does as the market seems to be reacting to the decreasing price of aluminium. If AWC made most of its money from producing aluminium this would be very concerning as the costs involved in producing aluminium are large and the margins would be squeezed very tightly.

Despite this most of its revenue comes from selling bauxite that they mine and alumina that they have refined from bauxite. The price of alumina has risen in the past year to around US$600 per tonne from US$350 per tonne and the benefits of this have been shown in the recent Q3 earnings where they announced a 3% increase in EBITDA on the previous quarter at an average price of US$500 per tonne. Costs AWC roughly US$190 per tonne to produce alumina and that's somewhat stable.

I think there could be a chance they hit a 10% dividend yield again this year, if you look at the previous 10 years there are 2 other years where they have done this. Just acknowledge that AWC carries with it some risk and is largely at the mercy of the price of alumina and this can be volatile. Other than that company is very healthy and is working with a manageable amount of debt compared to previous years. I don't actually see why they shouldn't be able to declare a similar earnings per share of around 16 cents like last year in this years Annual Report  (given that they announced an EPS of 9.9 cents for the half year in June).