Hi Ithigham,
My thoughts. CIA is a special case. Its been hit hard because its expansion is not ramping up production as fast as it should be. The performance of CIA over the next year is going to hinge on whether they can bring their operation up to nameplate.
Provided they can meet nameplate capacity then CIA is a relatively low cost producer at roughly AUD80 per tonne for a 66.2% Fe product. With a solid balance sheet and growth upside.
The other company you named has a cost of AUD110 to 120 per tonne for 65% pellets. So its higher cost which makes it much more risky in a downturn. Thats why its board keeps such a big cash buffer on its balance sheet as protection for a downturn.
In terms of the iron ore price nobody knows whats going to happen. It ranges over time between about USD50 and USD200 per tonne for 62% Fe product. Assume the price will go to the low and the high over the cycle because thats what history tells us will happen.
Personally I have a lot of CIA shares. I am not selling but if they can sort out production I will buy more when the price drops. I reckon there is also takeover upside in CIA. I reckon it would also be a good target for several of the big players.
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