high grade article

I wonder what the "dedicated business development appointment within the next month" will be....



http://www.highgrade.net/article/2012-02-08/Past_gives_BC_Iron_different_view_of_the_future

Past gives BC Iron different view of the future
Michael Quinn, 8 February 2012

Mike Young (left) and FMG's Andrew Forrest.
BC IRON is on the hunt for new iron ore projects and managing director Mike Young believes there remain plenty of opportunities to be had despite the rush to the sector in West Africa and elsewhere in recent times. And given BC Iron is one of the few in the sector to have actually discovered and developed an iron ore mine, it stands to reason it’s got the knowledge, the building cash pile and the general wherewithal to throw its weight around should the right opportunity present.

Young said the company had looked at opportunities in West Africa over the past year – and had personnel at the Indaba conference in Cape Town this week – and had also had a “preliminary” look at prospects in Brazil, as well as elsewhere.

“We’ve looked at quite a lot of things and either discounted them, or our view on value and the vendor’s has been different,” Young said.

He’s unconcerned by the pack of companies that, publicly at least, appear ahead of BC Iron.

“We know a lot more about iron ore than a lot of those companies do,” he said. “We’ve been mining iron ore and marketing it in China and the IP we have is different to the IP those guys have. We’ve got customers in China that are willing to put money in. We’ve filtered out the tyre kickers and we’ve got access to real capital. So it gives us an advantage. So I’m not saying we’re going to go and find a virgin discovery, but if some of the companies found something and they are trying to find money in China, we’ve got a direct connection into some good capital there.”

BC Iron’s own cash holdings are growing courtesy of its Nullagine joint venture with FMG in Western Australia.

The cash flow means BC Iron’s options on funding have increased further.

However, Young indicated the company currently did face a conundrum of sorts with its scrip.

“Right now I think that on any metric – and I know you hear this from a lot of companies about being undervalued – but I did an investor briefing today and they did the math, and they said, ‘this is your market cap today, and this is your margin, and this is your tonnes and this is how much money you are going to make and your shareprice is only $A2.75 ... what’s wrong with this picture?’.

“And the problem is we’ve got such a tight registry that we’ve got very low liquidity in the shares. So one of the things we need to consider in any transaction is whether we create more liquidity in the shares ... but the flipside is they are undervalued.

“So we’ve got this nice tight capital structure, but you are kind of painted into a corner.”

Still, Young would no doubt concede it’s hardly the worst problem to have.

In terms of style of projects being assessed for addition to the BC Iron portfolio, Young suggested opportunities with lower grade hematite were perhaps being overlooked by Australian companies and others blinkered by the high-grade hematite historically mined in the Pilbara.

Meanwhile, the company expects to make a dedicated business development appointment within the next month.

A deal in 2012 clearly appears a distinct possibility