Northern Iron Ore net income increases 135% yoy in 2011

Northern Iron Ore (SGOK UK) reported on March 16 net income of USD 783 mln in 2011 (+135% yoy) in an announcement for its AGM on April 19. The agenda for the AGM includes the distribution of dividends and approval of “significant deals”.

Roman Topolyuk: Northern Iron Ore’s strong financial performance was in line with that of Metinvest other listed iron ore asset, Central Iron Ore (CGOK UK), recently published, and was driven by record high iron ore prices. Northern’s reported net income is close to our expectations (+2%). If the Northern Iron Ore’s AGM supports full distribution of annual net income, which has for the last several years, implied DPS would be USD 0.34 per share, and dividend yield would be 23%. Shareholder can obtain a put option by voting against approval of “significant deals” at the AGM (see our note dated March 1) to sell shares in Northern Iron Ore to the company at the price one day before the AGM announcement – UAH 11.89 (USD 1.49).