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BCI Minerals Tips Higher Iron Ore Earnings

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THE BOURSE WHISPERER: BCI Minerals (ASX: BCI) is anticipating a healthy windfall from the recent rise in global iron ore prices.

BCI Minerals said it expects increased EBITDA from Iron Valley for the June 2019 quarter compared to the levels reported for the first three quarters of the current financial year (FY19).

Iron Valley is a mine in the Central Pilbara region that is operated by Mineral Resources (ASX: MIN) and has Ore Reserves of 95 million tonnes at 58.4 per cent iron (as at 30 June 2018).

BCI receives a quarterly royalty from MIN and the company’s EBITDA from Iron Valley has ranged between $5.6 million (FY18) and $18.3 million (FY17) since operations commenced in 2014.

BCI previously reported its EBITDA from Iron Valley for the first nine months of FY19 was $6 million from 5.5 million tonnes shipped and that it expects Iron Valley EBITDA for FY19 of between $6 million and $12 million.

However, iron ore prices have enjoyed a large spike during the last six months due to global supply issues and ongoing strong steel demand and have been particularly strong in the June 2019 quarter to date, with the CFR 62 per cent Fe iron ore price averaging US$96 per dry metric tonne (dmt) in April and May and the spot price currently at US$105/dmt.

This compares to an average of US$74/dmt for the first nine months of FY19.

Discounts for 58 per cent Fe iron ore products have also reduced materially and are at the lowest level in more than three years, leading to a reduction in discounts for Iron Valley product.

Although most of the recent Iron Valley shipments have been iron ore fines, which has a lower price than lump, overall pricing for Iron Valley product has been strong, particularly in April and May 2019.

BCI now expects FY19 EBITDA from Iron Valley to be between $11 million and $12 million, which is at the upper limit of the company’s previous estimate.

“If the iron ore market and MIN production levels remain at current levels, FY20 is expected to be another positive year for BCI’s Iron Valley royalty,” BCI Minerals said in its ASX announcement.

“Potential further upside exists if the proportion of lump shipped by MIN returns to long range average levels.”

BCI Minerals currently boasts a cash position of $34.8 million (as at 31 May 2019).

Combined with stronger royalty earnings from Iron Valley, the company believes it is in good stead to continue advancing its Tier 1 development project, the Mardie salt & potash project, located on the West Pilbara coast in the centre of Australia’s key salt production region.

The Mardie project is expected to produce high-purity salt (typically 99.7 per cent NaCl) and sulphate of potash (SOP) via solar evaporation of seawater.

“Using an inexhaustible resource and a production process driven mainly by natural solar and wind energy, Mardie is a sustainable opportunity to supply the salt and potash growth markets in Asia over many decades,” BCI Minerals explained.

“The long-term demand outlook for both salt and SOP is positive.

“High purity salt produced at Mardie will be used in chemical and industrial processes that create thousands of everyday products.

“Demand in this market segment, particularly in Asia, is expected to grow strongly over the next decade and result in a supply deficit.”

 

Email: info@bciminerals.com.au

Website: www.bciminerals.com.au

 

BCI Minerals Releases Maiden Kumina Resource

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THE DRILL SERGEANT: BCI Minerals (ASX: BCI) released a maiden JORC Mineral Resource estimate for the company’s Kumina tenements in northwest Western Australia, comprising estimates for deposits A, E and J.

BCI Minerals’ Kumina tenements comprise three granted exploration licences covering an area of approximately 480 square kilometres and are located approximately 100km south of Karratha and 50km north-east of the company’s Bungaroo South deposit.

The tenements host numerous channel iron deposit (CID) targets and higher grade bedded iron deposit (BID) targets with associated detrital iron deposit (DID) mineralisation.

The Mineral Resource estimates were completed at Kumina A (Channel Iron Deposit – CID), E and J (both Bedded and Detrital Deposits – BID and DID).

Calculations resulted in an Inferred Mineral Resource of 78.3 million tonnes at 59.1 per cent iron at a 57 per cent iron cut-off, or 115.2 million tonnes at 58 per cent iron at a 53 per cent iron cut-off.

“Proving up three deposits at Kumina to Resource status within nine months of acquisition is a positive result, particularly given these ‘forgotten’ tenements came with zero exploration information when acquired in late 2017,” BCI Minerals managing director Alwyn Vorster said in the company’s announcement to the Australian Securities Exchange.

“We now have a very promising group of deposits, including a significant tonnage of bedded iron mineralisation with a grade of greater than 59 per cent iron and relatively low impurities, providing a credible ore source in the current iron ore market environment.

“Kumina also has substantial exploration upside, with many prospective targets remaining untested, and we see it as an attractive standalone development opportunity.

“The Kumina resource quality is equal or better than many ore sources from the central Pilbara area, and the distance by existing road from Kumina to Port Hedland is shorter than the distance from our Iron Valley tenement (an operating mine) to Port Hedland, making profitable trucking or rail solutions possible.”

 

Email: info@bciminerals.com.au

Website: www.bciminerals.com.au

 

BCI Minerals Completes Mardie PFS

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THE BOURSE WHISPERER: BCI Minerals (ASX: BCI) reported results of a Pre-Feasibility Study (PFS) completed on the company’s 100 per cent-owned Mardie Salt and Sulphate of Potash (SOP) project in Western Australia.

BCI Minerals declared the PFS to have confirmed the technical and financial viability of the Mardie project, establishing a positive business case for production of 3.5 million tonnes per annum of high purity industrial salt and 75,000 tonnes per annum of fertiliser grade SOP.

The project design to emerge from the study maximises the attributes of Mardie’s coastal location and large area of flat land with low permeability, whilst minimising its impact on the coastal environment.

BCI Minerals emphasised industrial salt has an attractive long-term demand outlook in Asia, driven by expected growth in the chlor-alkali industry, with a net supply gap equal to approximately seven Mardie-sized projects anticipated to emerge over the next decade.

SOP fertiliser, it said, also has a strong demand outlook linked to an increasing Asian population driving food demand, lifestyle changes requiring high quality food, and the requirement for environmentally friendly fertilisers delivering high crop yields.

The Mardie PFS demonstrates a pre-tax NPV of $335 million, IRR of 20 per cent and annual EBITDA greater than $100 million, based on a salt price of US$30 per tonne FOB and SOP price of US$500 per tonne FOB.

Total capex of $335 million will need to be spent to reach full production of both salt and SOP, comprising $248 million for salt plus incremental capex of $87 million for SOP.

BCI indicated it now intends to conduct a Definitive Feasibility Study (DFS), targeting completion during 2019.

“BCI gained ownership of the Mardie tenements at minimal cost in 2012 (as Iron Ore Holdings Ltd) and the team has now delivered an innovative and attractive project solution through the PFS at relatively low expenditure,” BCI Minerals managing director Alwyn Vorster said in the company’s announcement to the Australian Securities Exchange.

“The attractive projected investment returns of greater than $300 million pre-tax NPV, EBITDA of $100 million per annum, and potential to be a low-cost salt and SOP producer, make Mardie a compelling project for BCI to advance through the final feasibility study phase towards development.

“Availability of large areas of suitable land and securing environmental approvals are key barriers to entry in this industry, and BCI is confident that, through our positive engagement with authorities and our approvals track record, Mardie is well placed to secure key development approvals by the end of 2019.”

 

Email: info@bciminerals.com.au

Website: www.bciminerals.com.au