Is this the end of BC Iron Limited (ASX: BCI)?
After plummeting more than 96% since the beginning of 2014, shares of the junior iron ore miner today entered a trading halt.
Upon requesting the trading halt, the company's ASX announcement read:
"The trading halt is requested pending the release of an ASX announcement by BC Iron regarding a specific review of the various operating scenarios available to the Nullagine Joint Venture (NJV) in light of the recent material decline of the iron ore price. BC Iron Nullagine Pty Ltd, a wholly owned subsidiary of BC Iron, is the operator and manager of the NJV, a 75:25 unincorporated joint venture with a wholly owned subsidiary of Fortescue Metals Group Ltd."
BC Iron says the announcement is "solely" related to the NJV with Fortescue Metals Group Limited (ASX: FMG), and not its other iron ore projects, such as the Iron Valley project – operated by Mineral Resources Limited (ASX: MIN) – or the Buckland mine.
BC Iron says its shares will remain in a trading halt until it makes the announcement or at market open on Monday 14 December 2015.
Foolish takeaway
With iron ore prices falling from over $US135 per tonne in 2014, to below $US40 per tonne today, many Australian iron ore miners are no longer making money on their product. In April, analysts at UBS estimated BC Iron's breakeven price was roughly $US59 per tonne.
Therefore, unless there has been a significant change in the miner's cost structure or the market price rebounds (both appear unlikely, in my opinion); unfortunately, although this may not be the end of BC Iron the outlook does not look good for BC Iron shareholders.
