big wall, page-3

MININGDAILY
12 JANUARY 2010 | 1
MICHAEL MILLS

The share prices of junior iron ore miners
have risen strongly in recent weeks
thanks to the dramatic rise of the iron
ore spot price to a high of US$131.20
per dry metric tonne.
Prices have ballooned in the last
month from below US$100 per
tonne, thanks to a drastic rise in material
intake from steel mills.
The share prices of Fortescue
Metals, Atlas Iron and Brockman
Resources opened today at $5.30,
$2.31 and $2.82 respectively.
These prices have been the companies'
highest in the past 15 months.
Foster Stockbroking analyst
Michael Evans told MINING DAILY it
was difficult to predict how long this
trend would continue.
China is still rebounding and the
iron ore market is still tight, so it could
continue for some time, he said.
Many of these juniors are also
coming off low bases.
However, Evans said it was likely
the spot price will settle somewhere
around its current levels.
I do not think it will go too much
higher, if at all, he said.
However, once the spot price does
settle, I think the share prices of many
juniors could continue to rise.
A lot of the companies on the
rise at the moment are not actually
in production yet, so companies
like Brockman Resources, Iron Ore
Holdings and FerrAus could go higher.
Evans also believes the days of
benchmark price contract negotiations
are numbered.
I do not think there is any reason
why iron ore cannot move to
the spot market like a lot of other
commodities, he said.
Obviously it is not a homogenous
commodity like gold or copper, but
there are large spot markets in coal
and other bulk commodities.
Despite the fact that spot markets
are more volatile, they still seem to
work for most participants.
Regardless of whether contract
prices are abandoned, Evans expects
the share prices of juniors will continue
to rise in the medium term.
Iron ore juniors revel in spot price rise