EBITDA of Amapa at current spot24 Apr 2021 15:41
Thought I'd update MY estimate of the EBITDA of the Amapa Iron Ore project based on the current spot:
http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2021-04-23 185.30 220.70
]===
The estimated EBITDA using $61/t Fe62% and $80/t Fe65% can be obtained from the JRP, and is summarised at:
"Approval of Judicial Restructuring Plan Paves the way for the Restart of the Amapá Iron Ore Project." (30 August 2019)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2887382
===[
At full production and using US$61 per tonne of 62% Fe Amapá is forecast to have:
o an average net revenue after shipping of US$266 million per annum,
o and an average EBITDA of US$136 million per annum.
]===
The additional EBITDA due to the increase in iron ore prices above this VERY conservative baseline is:
($185.3/t - $61/t) * 0.9Mt + ($220.7/t - $80/t) * 4.4Mt = $111.9m + $619.1m = $739m
The average EBITDA of $136m (which appears to be average over project not average at full production, meaning this is conservative, but that is another story) would be increased to: $136m + $739m = $875m. It should be noted that other aspects have changed since, such as exchange rates and shipping costs, meaning this figure could be both lower or higher, but likely only by single or low double digit percentages, and that it is VERY unlikely that it'll stay this high for life of project.
We have an option to take up to 27% of the JV company which will own 99.9% of the project when the negotiations with the banks completes which we are lead to believe is imminent, and has been for some time, and a first right of refusal to take up to 49% on terms not fully disclosed.
Absolutely eye-watering. Picked myself up a decent handful of shares towards the lows last week, as contrary to market movements, no news is not bad news IMHO, just an opportunity to top up before the fireworks begin. ;-)
Ob.
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