Great News
Just read this on placera.nu(copied from pcan)
Hang in there boys and girls it's going to start getting fun.
Tata Steel raises its long-term iron ore price to USD 130-140/tons
• Tata is forecasting long-term iron ore prices in the range of USD130-140/tons. According to a news article, Tata Steel expects tight supply of iron ore to last until 2016-2018, as there are limited of new capacity scheduled for the period. Tata Steel is the world’s seventh-largest steel producer, with production capacity above 28mtpy and hence high iron ore demands.
• Upside in iron ore price. Based on our long-term iron ore price of USD 110/ton (FOB Narvik) and cash cost of USD 60/ton, our NAV yields NOK 30 per share for NAUR. However, if increase our iron ore price assumption to USD 130/ton, which is the low end of Tata Steel’s forecast, our NAV yields NOK 45 per share. Based on USD 140/ton, our NAV yields NOK 55 per share and finally market-to-market valuation, which shows the upside potential to our NAV (with iron ore spot price of USD 180/ton), yields NOK 90 per share.
• Newsflow ahead. Going forward we expect strong newsflow from Northland. The resource updates for the Hannukainen and Pellivuoma pit are expected released in Q2. More importantly is the feasibility study for Kaunisvaara logistics, which is expected in mid-April and should provide updated capex and cash cost estimate for transportation. This should de-risk the project further.
• Arctic Buy, target NOK 30. We find the comments from Tata Steel very positive for Northland, as it highlight the upside found in our very conservative iron ore price assumption. Northland is currently in the construction phase and production is less than two years away. The company’s mining assets are located in Northern Sweden and Finland, hence Northland should benefit from stable political environment and strong governmental support onwards. We reiterate our BUY recommendation, with target NOK 30 per share.