One mining stock that went up – Mineral Resources Limited

In February 2017 following the release of the half yearly results, MRL provided a guidance of EBITDA in the range of $480 million – $520 million and was based upon the specific assumptions as to iron ore pricing and tonnages for the second half of the year. The assumptions include, an index price of $70 (USD) for the 62% Fe Platt’s index, discount of 25% for the lower grade nominal 58% Fe fines, and an AUD rate of 75 cents. However, that has not played out in practice and the significant reduction in index pricing coupled with the widening discount for lower grade ore has seriously impacted the EBITDA outcomes for all producers of lower grade iron ore. Over the period, the iron ore index pricing has fallen from around $80 (USD) per ton to a low of $54 (USD) per ton and the discount has widened from around 18% to 35%.    

 

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