From Goldman today on Atlas Iron full production update:
On balance, we believe AGO has delivered a disappointing 4Q14 result.
Production/shipments beat – AGO pre-announced FY14 shipments of 10.9mt, beating guidance (10.2-10.7mt) and our estimates (10.6mt). Inmtoday’s result we gain comfort that it was underlying 4Q production of 3.1mt (GSe 2.6mt) delivering the beat, rather than just destocking.
Received pricing miss – Heavy discounting for low grade/quality has delivered a contract price of US$78/dmt CFR (vs 62% Fe index 103/dmt CFR), which once provision pricing, shipping and moistureadjustments are taken in account, further reduced the received price to A$62/wmt FOB.
EBITDA/Cash balance miss – Pricing delivered the miss in FY14 unaudited EBITDA guidance of A$240-260m (GSe A$330m) and year end cash balance A$265m (GSe A$318m). It also implies AGO delivered a A$0-20m loss during the quarter.
The cash burn is beginning.