The broker has ceased coverage of Sundance. In the low iron ore price environment, the broker cannot see how the company will raise the funds for its project, and given debt already outstanding on financing to date, significant equity dilution may be necessary to honour commitments.
The broker notes 2014 iron ore supply from the world’s top five producers looks set to be 86mt more than forecast, and the impact of low cost supply growth is occurring sooner and more significantly than the broker previously assumed. Australia has added half a Brazil in just nine months. The broker has subsequently cut its forecast 2014-19 prices by 5-20%.