Mixed reactions detract from success of doubled dividends

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 23 Sep 2013   Posted by admin


BURGEONING Pilbara-based iron ore miner BC Iron has released the results of a successful year; doubling its final dividends and increasing production at its flagship Nullagine joint venture with Fortescue Metals Group.
Despite rumours of an imminent drop in the iron ore price, BC Iron announced a 41 per cent increase in its underlying net profit for the 2012 to 2013 financial year; recording a net profit of $71.4 million, up from $50.6 million the previous year.
The company passed on the funding directly to its shareholders, who received a substantial 30 per cent share dividend, fully franked.
In the wake of the announcement, former major shareholder Consolidated Minerals sold its 28,522,712 ordinary shares to a range of institutional investors at a 5 per cent discount from the true value of each share; $3.90 per share, down from the true market value of $4.10. Consolidated Minerals was a founding investor in BC Iron, representing 23.1 per cent of the total shares on issue.
BC Iron stated that the sale was expected to increase its free-float while further improving liquidity.
However, BC’s market strength still suffered a reciprocal fall, as shareholders reacted to change in the company’s investor structure: in the days following Consolidated Minerals move, BC’s shares
fell 2.7 per cent to $3.99. BC’s Nullagine iron ore mine hosts a proved and probable ore reserve of 37.2 million tonnes of ore at 57.1 per cent iron, from within a mineral resource of 117.7mt at 53.4 per cent iron.