From the AFR:
Kerry Stokes’s iron ore venture is set to be acquired under a takeover deal announced on Monday by established iron ore miner BC Iron.
…importantly for BC shareholders, the deal will extend the company’s mine life from about five years out to about 20 years, while giving IOH shareholders immediate access to a larger volume of export sales.
Under the terms, the deal can be cancelled of the benchmark iron ore price falls below $90 per tonne for more than 20 days in a row.
Here’s the UBS break even chart:
BCI is buggered next year when iron ore falls to $80. If the whacky $90 price provision is any guide to IOH’s break even then buying it is just throwing good money after bad.
Maybe there are some synergies tp bring that cost down but as a rule of thumb I’d say everyone above FMG is the walking dead.
