BCI Details
Significant Upgrade in FY17 EBITDA Guidance: BC Iron Ltd (ASX: BCI) recently announced for third consecutive quarter of record results from Iron Valley (operated by Mineral Resources under an ore purchase agreement with BCI). The EBITDA of A$8.1 million was reported for the December quarter 2016 from shipments of 2.1 million wet metric tonnes (wmt). The EBITDA includes positive adjustment of A$0.8 million relating to finalisation of pricing for shipments of prior periods. Further, the first half FY17 EBITDA from Iron Valley is reported to be A$12.8 million (unaudited) from shipments of 4.2 million wmt. The result was primarily driven by iron ore pricing and robust operational performance. Accordingly, the group has revised the FY17 Iron Valley EBITDA guidance to A$18 – A$25 million against the earlier provided guidance of A$6 – A$16 million.

Iron Valley Quarterly Shipments and EBITDA (Source: Company Reports)
 
FY16 Performance: The group reported revenue of A$151M in FY16 while net loss after tax was of the order of A$80M and underlying net loss after tax of A$9M. To manage balance sheet, the group had undertaken steps on settlement of Watpac litigation to reduce risk and suspended Nullagine (sold 75% interest to Fortescue Metals Group for an ongoing royalty). BCI had reported shipping of 6.5M wmt for BCI EBITDA of A$10.2M from Iron Valley. The group also could successfully complete $25.5M entitlement offer in FY16. Overall, BCI’s pipeline of operating assets, royalties, development projects and exploration targets indicate for an upside.
 
Stock Performance: The stock rallied 20% on January 12, 2017 and surged 27% in last six months (as on January 11, 2017). We give a ‘Hold’ recommendation on the stock at the current price of $ 0.21

 
BCI Daily Chart (Source: Thomson Reuters)

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