BCI Minerals - Increasing iron ore royalties supporting Mardie
BCI Minerals reported a c 33.3% increase in royalty EBITDA during Q3 from operations at Iron Valley under the influence of higher iron ore prices in the aftermath of Vale’s Feijao tailings dam disaster in January and the supply disruptions to exports from north-western Australia occasioned by a trio of cyclones in the region. Notwithstanding the disruptions, shipments from Iron Valley were steady at 1.8Mt (cf Edison’s prior estimate of 7.5Mt for FY19, or 1.875Mt per quarter) – albeit comprising a higher proportion of lower-value ‘fines’ product as the operator sought to draw down existing fines stockpiles. We have updated our forecasts for FY19 to reflect these changes. More significantly however, BCI’s share price remains at a >50% discount to our ‘base case’ valuation of 34.05c/share (see below) at a time when the DFS target parameters are becoming increasingly de-risked.BC Minerals is engaged in operation, development and exploration of mineral projects, focusing primarily on iron ore deposits in the Pilbara region of Western Australia.
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