MinRes is facing the full force of the dreaded margin squeeze meets overvaluation.
The margin squeeze is coming from iron ore prices that continue to move lower, spreads on lower grades that continue to move wider, with both impacted by reduced China steel production, and lower associated iron ore demand.
As if that wasn’t enough, add in the high WA labour costs.
The whole point of using asset based multiples is to get around the issue of when earnings and even sales themselves are overearning, as was the case when iron ore mooned to $230/tn.
And those P/B metrics were pretty peaky, even as China steel production rolled.
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