Despite the headlines about the decline in iron ore over the past few months, Australian miners show no signs of slowing production. Indeed, most are ramping up production, to the benefit of McAleese Limited (ASX: MCS), a road haulage contractor who will ship 6mtpa of ore for Atlas Iron Limited (ASX: AGO) from 2015 (up from 3Mtpa previously). Iron miner BC Iron Limited (ASX: BCI) released its latest quarterly report today, allowing shareholders the opportunity to check in on what has been one of Australia’s most successful miners of the past 18 months. Embattled staples producer Goodman Fielder Ltd (ASX: GFF) has also received and rejected an ‘opportunistic’ takeover offer.
McAleese will be well known to some readers, with the dubious distinction of being one of the worst performing IPOs of the past twelve months. The worst looks like it could be past however, with a number of small positive announcements recently. The latest sees McAleese doubling the size of its iron haulage contract from January 2015, which represents an extra $220 million in revenue over the life of the agreement.
Combined with the recently announced bargain acquisition of Western Australia Freight Group, McAleese looks to be taking baby steps in the right direction, something beleaguered shareholders will be glad to see.
BC Iron is on track to deliver another 6Mtpa of iron from its Nullagine Joint Venture with Fortescue Metals Group Limited (ASX: FMG) this year. Management anticipates that revenues will be lower later in the year, and cash costs have been marginally higher as a result of rain, but broadly BC Iron should perform as predicted. Exploration efforts have commenced in Brazil, and an improvement project for low-grade waste ore was successful, which will lead to a redefining of the company’s reserves and mine plan in mid-2014.
International giants Wilmar and First Pacific have announced an offer of 65 cents per share in an attempt to acquire the 90% of Goodman that they don’t own. The proposal is conditional on unanimous board approval from Goodman, approval that is not forthcoming as senior management feels that the offer is opportunistic and undervalues Goodman Fielder.
Wilmar and First Pacific are lobbying for a period of time to conduct due diligence on Goodman’s books, which could potentially see the offer increased or withdrawn, depending on what they find. Goodman has struggled with earnings over the past several years and has seen its revenue eroded by a combination of factors, so the proposed takeover offer could be shareholders best bet for achieving value for their stake.
McAleese looks to be putting the horror months earlier in the year behind it, although it is worth noting that transport is a low-margin business and it could still take the company quite a while to recover from its earlier misfortunes. BC Iron is still going strong, and incidentally pays a dividend of around 7.5% despite the recent weakness in iron ore prices. As for Goodman Fielder, I would consider taking the opportunity to sell out and invest in two blue chip stocks that you should own, but probably don’t.