Iron ore price, page-111

I hold FEX & TI1 and think they are in different places. FEX SP trade between 22c & 25c from October till late December when it jumped to 31.5c over the last month. Much of that jump IMO was down to IO price improvement and the expectations that the hedge was maintaining a reasonable margin.

Rightly or wrongly, holders expected probably $10m more cash in bank at end December which could be paid out as another dividend of 4-5c in March. The announcement quashed that idea, and MC dropped by about $20m. So I put the drop down to 50% due to lower earnings and 50% market volatility/ overreaction.

TI1 stopped exports when the IO prices dropped. Expectations are already low and have been trading around 3-3.6c until a couple of weeks ago. Yes we are up 10% but I put that down to IO prices improving. If TI1 have started shipping again and are making reasonable sales to BSMs the SP should IMO kick from the 4c level. I am not expecting a return to the levels we saw in June (10.5c) but something closer to 6c would be nice. Also the prospect of a dividend later this year if sales can be maintained would be a bonus.