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).

Stokes, a billionaire best known as the major shareholder in the Channel Seven television network and Westrac industrial equipment business, is also the 50.5% shareholder in IOH, one of many small iron ore explorers active in the Pilbara region of Western Australia.

For some time, management at IOH has been saying that investors are substantially undervaluing the stock, a claim which has fallen on deaf ears because that’s what managers at small exploration companies always say.


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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 Price

Closing price for the last 90 trading days
Source: Morningstar

BN30 Index

Index = 100 as of 4 Jan 2016
Source: Morningstar

Total Shareholder Return as at 29/09/17

1 year TSR5 year TSR
112thAtlas Iron71%-58%
289thFortescue Metals Group12%13%
308thNorthern Star Resources9%36%
321stWoodside Petroleum6%3%
719 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

$9k Issued
$0 Bought
$27k Bought
Total value as at the date of the transaction
Source: Morningstar


1st-Fortescue Metals Group$10,999.7m
3rd-Woodside Petroleum$5,715.9m
4th↑Atlas Iron$887.9m
5th-Northern Star Resources$850.6m
489 listed resources companies ranked by revenue.
Source: Morningstar

Remuneration from Fortescue Metals Group

4thNev Power$5.324m
655thMark Barnaba$223k
774thSharon Warburton$170k
Ranked by total remuneration from all listed WA companies

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