BCI Minerals is dropping its iron ore business after $17m loss
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BCI Minerals has decided its best bet would be to sell off its Pilbara iron ore projects after it sunk to a $16.9 million loss in FY18.
BCI (ASX:BCI), formerly known as BC Iron, struggled in the past to keep its lights on after a steep drop in the iron ore price.
To improve its odds, the company diversified into salt, sulphate of potash (SOP) and gold.
The company is now selling its iron ore projects after it was “approached by multiple parties expressing strong interest” in acquiring them, BCI told investors on Thursday morning.
Shareholders seemed to think it was a good idea, pushing shares up 3.7 per cent to 14c on Thursday morning.
Revenue from BCI’s operations slumped about 48 per cent to $33.4 million in FY18 compared to the previous year – when it booked a $5.7 million profit.
BCI produces hematite, which has a lower iron content than magnetite. It is also a lower grade than the big iron ore producers.
The company said on Tuesday its bottom line was hurt by lower iron ore pricing and shipping volumes as well as increased spend on developing the Kumina iron ore project and Mardie salt project.
Lower grade iron ore suffered discounts of as much as 40 per cent in FY18 as Chinese steelmakers increasingly favoured higher quality feedstocks to boost mill productivity and meet more stringent pollution control measures.
Mount Gibson Iron (ASX:MGX), which also produces lower grade iron ore, said earlier in August that its 59 per cent iron ore sold for roughly $US30 ($41) per tonne in FY18 – a significant drop on the prior year’s $US44 per tonne.
Meanwhile, BCI spent $13.4 million on exploration and $10 million to acquire the Kumina iron ore project and earn into the Carnegie potash project.
The company still had about $13.1 million in cash and no debt at the end of June.
BCI says it plans to use the cash from the sale of its iron ore projects to fast track a definitive feasibility study on its Mardie project.