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UNDERVALUED: Two recent deals suggest Kerry Stokes' Iron Ore Holdings stock is trading at a hefty discount.

How to make $500 million without really trying

Kerry Stokes probably doesn’t need an extra $500 million, but if anybody else wants to triple their money it might be time to join him on the share register of Iron Ore Holdings (IOH).

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These calcs are incorrect, you have the numerator / denominator numbers the wrong way around. Ie the calc for the Hamersley deal is ~$0.52 ($32m / (106Mt @ 58.6%). The calc for the MIN deal is ~$1.35 ($42m / (54.8Mt @ 56.7%). Unfortunately this infers that Iron Valley is only worth ~$78.5m ($0.52 x 259.1Mt @ 58.3%). Based on the company’s numbers, IOH have ~463.2 Mt of contained Fe (including low grade ore) – at best the company is worth ~$240m using your RIO comp (lower grade ore not likely to fetch ~$0.50 / tonne).

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Share Transactions

02/07/13
$95k Bought
18/05/11
$40k Bought
18/05/11
$370k Bought
Total value as at the date of the transaction
Source: Morningstar

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