Company news: Indiore and Emeco
Indiore has advised that the engineering undertaking of the Phase 3 expansion project (benefaction plant to convert low grade iron or into high grade) will be more costly than previously thought. On the flip side though, the refined engineering design increases the yield (and thus return) from the plant post completion. In parallel, the company has announced a new CEO will be sourced, and a new Chairman has been appointed. We are supportive of this management and Board refresh, and assess the Phase 3 project to still be a compelling project offering strong returns.
Inclusion into a significant market index doesn’t (in our mind) impact the investment rationale of any company. That said, we note the announcement today that Emeco will be included in the ASX All Australian Index 200 from 24-Sep-18. This is notable for two reasons:
- it is a positive reflection on the journey the business has been on since difficult times a few years ago, and
- index matching or hugging managers will become buyers, which may provide some further price support.