Livewire has acquired Market Index, the country’s leader in free stock market data.
Find out why.

At the current iron ore price, exchange rate, and prevailing quality discount, we estimate that BC Iron currently has zero free cash flow

Canaccord Genuity

Stockbroker

At the current iron ore price, exchange rate, and prevailing quality discount, we estimate that BC Iron currently has zero free cash flow. BC Iron's share price has fallen by 80% in the last three months. The drop from $3.00 to $0.60 since mid-August has occurred concurrently with the $256m acquisition of Iron Ore Holdings (IOH) and the precipitous fall in iron ore price to US$70/t. We have stress tested BCI's cashflows at various iron ore prices, exchange rates and quality discounting. Should the iron ore price remain in the low US$70's over the next couple of quarters, with no considerable positive movement in exchange rate or quality discount, we suspect that the viability of the Nullagine JV will be put under significant pressure. Certainly, at the current iron ore price, exchange rate and prevailing quality discount we estimate BCI has zero free cash flow. We have moved the rating from a BUY to a HOLD, with a reduced price target of A$0.60.


Canaccord Genuity
Canaccord Genuity
Stockbroker
Stockbroker

Canaccord Genuity Group is a leading independent, full-service financial services firm. Canaccord Genuity has been driven by an unwavering commitment to building lasting client relationships. We achieve this by generating value for our individual,...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.