Shares of junior iron ore miner BC Iron Limited (ASX: BCI) have rallied this afternoon after the company provided an update for its March quarter operations. After falling 5.5% earlier in the session, the stock is now trading 10.9% higher at 30.5 cents per unit.
By comparison, Fortescue Metals Group Limited (ASX: FMG) has fallen 3.4% while Rio Tinto Limited (ASX: RIO) is down 1%.
Prior to today, investors were increasingly concerned about the future of BC Iron. After iron ore prices fell almost 25% in just five weeks, fellow junior miner Atlas Iron Limited (ASX: AGO) entered a voluntary suspension from trade and many investors assumed it was only a matter of time before BC Iron did as well.
Indeed, the market didn't know what to expect from today's announcement and what it reported clearly came as a surprise. It said that it maintained a strong balance sheet position, with cash of $107.5 million and debt of US$35.8 million while it was still focused on cutting costs.
While its Nullagine Joint Venture's (NJV) C1 cash costs were $49 per wet metric tonne (wmt) – down from $54 in the year-ago period – it also shipped 1.46 million wmt, representing a run-rate of 5.8 million tonnes per annum (71% of which is attributed to BC Iron). That is well above the company's targeted March quarter wet season run-rate of 4.5 million tonnes per annum.
The announcement has provided investors with an opportunity to catch their breath following an extremely harsh 12-month period which has seen the stock drop more than 93%. Unfortunately, iron ore prices are expected to fall further than their current levels, meaning that today's relief may be short-lived.
