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FMG - FORTESCUE METALS GROUP LTD


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  • 1 month later...

Hey Carbroker

I've invested in FMG blindly on the advice of a 'friend who knows' about these things, but know very little about it.

Things seem to be hotting up again with some good price rises over the last week or so.

Anybody know any more ??

 

Doc

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  • 4 weeks later...

crikey

 

having looked at what FMG say they are going to make ($400m before tax) the current market cap looks cheap. However, I tonne of new funds has to be raised which I guess is what is holding this back. Also many of the reserves are not yet classified as JORC compliant.

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You also have to look closely at the history of the man behind FMG.

 

Remember the good old days of laterite nickel, and how that was going to make the Annaconda shareholders wealthy?

 

Different time, different place, different commodity but geewhiz, I do seem to recall having heard it all before.

 

It wasn't so long ago that the deposits being promoted by FMG were regarded as low grade and too far from infrastructure to be even close to economic.

 

Due diligence with an above average degree of scepticism is recommended here.

 

R/happy

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Thanks Happy. As always appreciate your posts. I wasn't around this sector when Annaconda was being promoted, but caught the tail end of it when it died. Perhaps one will wait till FMG falls over, like Annaconda, now Minara (MRE). MRE looks ok now, being largely debt free and not promising the earth.
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It's probably worth adding a few more comments on FMG and iron ore in general.

 

High grade for iron ore is +60% Fe and preferably +63%. The maximum theoretical iron content in an iron ore is approx 67% (pure hematite). The best Pilbara iron ores are almost pure hematite, and are simply dug out of the ground and put on a boat to Japan/China

 

Ore with 57% iron has approximately twice the amount of impurities that ore with 63% iron has, and it fetches a price that is substantially lower.

 

FMG is looking at ores of 55 - 58% iron, so they are not dealing with a premium product. FMG are looking at "beneficiation" which involves a hugely more expensive capital cost than the RIO/BHP mines, which can just dig ore out of the ground and sell it "as is". This also has to be coupled with the cost of supplying a rail link to the port. RIO and BHP already have the rail link, but FMG either has to build one, or drag RIO and BHP through every court in the land to get access to their rail lines.

 

Conclusion - FMG will just not achieve the profit margins that RIO/BHP can.

 

There are also some companies promoting magnetite projects, which have huge resources, but grades of around 30 - 40% iron. These magnetite projects require the ore to ground very finely, and separated from the silica impurities. It's technically possible, but the size of the plant required to crush and grind even 20Mt/per annum (which would produce perhaps 10Mt of product) is simply mind-boggling in terms of size and cost.

 

Don't be fooled by the hype asociated with the large tonnages being quoted for in-ground resources and potential production rates .......... Iron ores ain't all the same.

 

Investment without research is fraught with dangers.

 

R/happy

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  • 4 weeks later...

Sure is Slam!!!

1mill@ 55cents no ANN pretty confident buyer!!!

Cheers Pete

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haspete

Could be news on the new railway and port facilities or could be the start a new iron

ore mine in the Pilbara.

Something is up, as you say 1mil parcel traded at 55, April was the last time it was at that.

 

Are you in?

 

Cheers

Slam

 

 

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