Iron ore prices have pulled back from US$130/t to circa US$120/t but Macquarie reassures the fundamentals for the commodity remain robust. Moreover, Australian shipments remain strong at around/above their guidance ranges while Vale shipments appear to lag.
The broker is positive on the iron-ore miners and notes Mount Gibson boasts an free cash flow yield of more than 10% at spot prices.
Outperform rating retained with the target price reducing to $0.95 from $1.05.
Sector: Materials.
Target price is $0.95.Current Price is $0.74. Difference: $0.21 – (brackets indicate current price is over target). If MGX meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).
