ATTENTION NUMBER CRUNCHERS Some of you are "beginning" to do a better job of digging into the numbers and the comparables to reach a reasonable estimate of future valuation. I salute you.
But it appears that none of you have yet discovered (and unless I missed the relevant post, in which case I apologize)or applied the proper numbers which convert the "Spot Price" (MB or Platts Indexes) into Sales Revenue.
Iron Ore is quoted and sold based on a "dmtu" (Dry Metric Tonne Unit) basis, which must be multiplied by the % of actual Fe content in order to calculate the final invoice value. A steel mill can't pay for material which is not convertible into steel! They need the Fe, not the other attendant minerals.
Example: If the Spot is $100 / CFR (Delivered)China for 62% Fe Fines (and the miner delivers 62% Fe Fines) the miner will be paid $100 x 62%, or $62.00 for each Gross Tonne delivered.
Therefore, your Revenue numbers are too high by <> 38%. There are other factors which can raise or lower the net price paid (Lump gets a premium vs. Fines of several dollars per Tonne and there are penalties for excess Silica etc.) but in CWRN's case those will largely cancel out.
REMEMBER that the freight costs (on the other hand) are based on GROSS TONNES shipped.
Don't feel bad about not having discovered this! VERY FEW people OUTSIDE of the business understand this fact! It never ceases to amaze me how many "prospective" Iron miners are unaware of this, so you're forgiven.
This is largely why your estimates of PPS are significantly higher than they should be, despite the fact that you are subsequently applying overly penurious discounts to the Bottom Line number, which is good, but no rational analyst would apply such huge discounts for uncertainty.
Look to my previous posts (and my deleted, but re-posted posts) to see my estimates (which I will stick with until someone proves me wrong)and I think your numbers will look similar once corrected.
I don't know about you, but I consider them to be fabulously attractive going forward. The big money players will agree with me, especially now that the "first ore" is about to be shipped. That is precisely why they are buying any shares that anyone is selling.
Again, my purpose here is to provide insights which will allow each individual to reach well reasoned, fact based conclusions.
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