Atlas fugged

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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.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.